Skip to main content
Normal View

Dáil Éireann debate -
Thursday, 21 Dec 1978

Vol. 310 No. 11

European Monetary System: Motion.

I move:

That Dáil Éireann supports the decision of the Government to participate in the European Monetary System with a view to improving the prospects of economic development and greater price stability.

I am sure all of us are conscious of the importance of the decision we are debating today. The Government's attitude has been made manifest in the many opportunities afforded for discussion in this House. This is the seventh such occasion. We have had an initial debate extending over five days and a full day debate yesterday week; we have had statements on three occasions; the subject was also covered in the Adjournment Debate.

I would hope that the discussion to-day will be conducted on a plane appropriate to the occasion. Certainly, I do not intend to chase all the hares raised in the motion put down by the Leader of Fine Gael, which I note, is broadly similar to that put down by the Leader of the Labour Party for the debate last week. When in my opening speech on that occasion, I availed of the first opportunity I had to rebut the misstatements and criticisms of the Leaders of the Opposition Parties which were crystallised in the Labour Party motion, some Deputies sought to characterise my speech as defensive or even petulant.

But, I ask the House, who has been petulant and small-minded in their approach to this subject? We have had statements and criticisms decrying the Government's record. We have had statements that the negotiations have been mishandled and that we should have got more. This approach is again seen in the Fine Gael motion on the Order Paper today.

What sort of approach is this? In the ordinary course of affairs, criticism of this nature would be understandable as part of the ritual of opposition. But what we are discussing today is no ordinary or routine decision. It is a decision of major significance for the future of the country. As such, it should not be approached as if it were only the proposal of the Government or the party on this side of the House which is at stake. I think that Deputies in seeking to make party political points rather than dealing with the merits of the decision are detracting from the worth of these discussions and doing this country little good. Do they support Ireland's participation? Where Deputies are opposed to participation, I would hope they would address themselves to the question of alternative courses of action. I hope that the Fine Gael Party will enlighten us as to whether they are in favour or opposed to our participation in the system which, while protecting Ireland's interests, is a significant advance in the development of the European Community. Certainly their motion gives no hint whatever of their attitude. It hits at details but leaves the principle untouched.

Only within the last few days we have had further evidence of just how fragile is the economic balance of recent years. Oil prices are once again rising. Currency instabilities can again contribute to the combination of recession and inflation from which Europe is now hesitantly emerging. Does this House really think that our position in this world would be better outside the monetary system which the countries of the Community are putting together, with so much thought and so much effort?

Is the argument that we should wait until the United Kingdom is ready to join? The United Kingdom has its own position to consider. Their course is dictated, rightly, by what they see as their best advantage. We respect their decision. Similarly our decision is dictated by what we see as to our benefit and to the benefit of the Community of which we are a part. Have those Deputies who argue that we should have waited really considered the consequences—politically, socially, or economically—of what they are saying? This country is a sovereign State and a member of the European Community and will make its judgments accordingly.

Apart from getting the terms that might not be available later, I believe we have enhanced the status of our country within the Community by our decision. I believe as well that we have built up a new reserve of good will that will inure to our benefit in the future.

The purpose of EMS is to avoid the extreme monetary fluctuations which have been a major contributory factor in the economic instability of recent years. Economic growth requires a healthy investment climate. Monetary instability causes uncertainties which inhibit the development of investor and consumer confidence, and so damage growth prospects, both at the domestic and the international level. This has very clear implications for our ability as a small economy, largely dependent on exports, to pursue the goal of full employment. It is very much to our advantage if international arrangements are made which can stabilise monetary fluctuations and reduce uncertainty.

I described the nature and shape of the new system in my statement on 7 December. A description was also included in the White Paper published last week. I and other Ministers have elaborated on aspects of the system in previous speeches and statements here. As I said last week, I cannot, at this stage, supply a great deal in the way of fresh information.

The transfer of resources under both the Community measures agreed in Brussels and the bilateral arrangements to which I referred then, will come to about £70 million a year for two years, and £45 million a year for a further three years, or about £275 million in all, over a five-year period.

As I indicated, the principle and amount of the additional bilateral transfers have been agreed but details have still to be settled. I can say, however, that while the agreement will be worked out and managed by appropriate banks and development finance institutions in the countries concerned—all six more prosperous member states are involved—the magnitude of the resource transfer involved is assured because the arrangements in question have the full backing of the respective Governments at the highest level.

It is no harm for the House to bear in mind that the principle of these transfers was accepted at the Bremen Council last July on my proposal, and that a great deal of the argument for them has since been made by this country. The fact that the full case was not accepted at the Brussels Council earlier this month has nothing to do with the quality or force of the arguments advanced by us. It concerns the relationships between other countries in the Community and the balance of advantage as they saw it in the emerging arrangements.

I doubt if any proposals emanating from a European Council, or indeed affecting the vital interests of this country, have ever been as thoroughly prepared. After the Bremen Council and the detailed discussions at official level, the Tánaiste discussed the proposals with his counterparts in all other member states of the Community. I had meetings with the French President, the British Prime Minister and the German Chancellor before the Brussels meeting. During the two days of the meeting in Brussels, again, I had bilateral discussions and contacts with other Heads of Government including, I might add, the Italian Prime Minister. Contrary to what is implied in the Opposition motion, we had, and have, the support of all other countries of the Community—each with its own problems and its own difficulties. And this support has been shown in tangible ways for everyone to see.

On 7 December, after the Brussels Council—I want to place this on record—I took an initiative and I telephoned Chancellor Schmidt to discuss certain possibilities which emerged from the discussions at the Council. We agreed that these possibilities should be further explored and arrangements were made for a meeting in Luxembourg on 11 December. Officials from my Department, the Department of Finance and the Department of Economic Planning and Development—I might mention the names—Dermot Nally, Maurice Horgan and Brendan McDonald respectively—met with representatives of the German Government, acting for the Presidency, participated at that meeting in Luxembourg at which the framework was worked out for the arrangements which finally emerged.

On the following day the French President telephoned me to clarify certain aspects of what had been discussed and expressed again his goodwill towards Ireland. More details of the Brussels proposals and of the new arrangements were elicited by direct contacts with the Commission—that is, at the highest level; Mr. Ortoli was involved—and at a further meeting in Brussels on 14 December attended by representatives of the Departments of Finance and Economic Planning and Development—on this occasion, again, Mr. Horgan and Mr. McDonald—and of the other countries concerned. These meetings and other informal contacts resulted in the clarifications and arrangements of which I have given the House as much detail as I am free to disclose at this stage.

The resolution of the European Council requested the Council to consider and take a decision on 18 December on a number of Commission proposals. These matters were dealt with by the EcoFin and Agriculture Councils—that is the Economic and Finance Ministers and Agriculture Ministers Councils—on Monday and Tuesday last. The Tánaiste will deal with the outcome of the EcoFin Council.

In relation to the CAP, the Council of Agriculture Ministers agreed that the technical consequences of EMS should not affect agricultural price levels or the distribution of MCAs. Unfortunately, this issue got linked to some others which could not be resolved at this week's meeting and the whole question has been left over until the January Council meeting. In the meantime agricultural arrangements will remain unchanged.

The Tánaiste will also deal in so far as is necessary with the exchange controls under the new system, which are designed essentially to monitor capital movements with a view to preventing any large or abrupt outflows and inflows. Some commentators have described the controls as harsh; indeed, the Fine Gael motion characterises them as "excessively severe". I cannot accept these descriptions. The controls are in line with those operating in most other member countries. I might say here, in connection with headlines I saw in this morning's Cork Examiner, that there is no evidence available for the story that hundreds of millions of pounds had been taken out of the country last weekend. While figures are not yet available on the basis of which I could definitely refute the story, I can say that it is extremely unlikely to be true. The banks were open for an hour only after my statement last Friday—references to aircraft being used to indicate the unlikely nature of the story. If anybody wished to transfer funds they could have done so simply by writing a cheque on Friday last. I mention that particularly because of the scare headlines that appeared in today's Cork Examiner in this connection.

The British Treasury has said that the United Kingdom Government does not plan to introduce exchange controls on financial transactions with this country in the immediate future but will keep the situation under review. This decision, reached following discussions at official level, is welcomed and appreciated by the Government and by me.

Clearly there are difficulties in participating fully and effectively in the EMS. These stem basically from the structural problems our economy faces due to our low level of development relative to that of our Community partners. These are reflected in the imbalance in foreign trade. Financial support will be required, and has been obtained, in order to offset these problems. This support should enable the public sector borrowing requirement constraint on public investment to be relaxed and will facilitate an acceleration of investment, especially in infrastructure, over and above that envisaged in the White Paper known as "National Development 1977-1980", without adverse effects on our reserves. The effects of this acceleration may not be felt in 1979. It will however, underpin the targets for growth and employment in 1980 and, more important still, allow them to be maintained in 1981.

The public capital programme this year is at a level not far short of £800 million. Next year's will no doubt be higher. There are considerable amounts of debts coming up for rescheduling, as well as repayment. In relation to the total sums involved, the amount of borrowing for which the package provides—something of the order of £300 million in 1979—is not disproportionate. Part of the borrowing will finance extra works necessary to offset the possible effects of the new system. The remainder will be necessary to finance investment which would have taken place anyway. I am not at liberty yet, in advance of the finalisation of the details of the arrangements, to indicate what proportions of borrowing are additional and what are substitution for borrowing which would have taken place anyway. The essential point is that the total amount of loans to be raised under the package is not a net addition to our borrowing requirement.

Participation in the EMS could have a short-term deflationary impact. Any assessment of this potential deflationary impact must be highly tentative as it depends on such factors as the response in terms of incomes restraint and external confidence in an independent Irish punt. This is a serious argument which was given much consideration by the Government in settling our attitudes as the discussions progressed.

Currency depreciation will no longer offset the worst effects of increases in unit wage costs. In any event, the prospects of price stability and a lower rate of inflation requires in turn that incomes must not be allowed to move ahead at the same pace as we have experienced in recent years, and that income expectations must adjust rapidly to the lower rate of inflation. This is central to our overall approach to the European Monetary System.

The need to maintain, and, if possible, to improve, our competitive position does not necessarily imply that the rate of pay increases which we can afford must be precisely the same as that obtaining in our trading partners. The vital element is unit wage costs—that is the growth in pay rates adjusted for productivity gains. If we can achieve a faster rate of productivity growth than our partners, then it will be possible to award ourselves higher pay increases, without exacerbating inflationary pressures. Only if we can narrow the productivity gap will it be possible to close the income gap between ourselves and the rest of Europe. We can enjoy substantial gains in real income within EMS but only if these gains are the result of increased output.

This is not a new departure but participation in EMS will highlight the adverse consequences of any failure on our part to observe this discipline. The rate of pay increase which we can afford cannot be determined in advance because it depends, as I have said, on the growth in productivity which we can achieve. But it is clear that a repetition of the events of 1978 must be avoided. Pay rates will rise this year by about 16 per cent compared with an average of about 10 per cent for the main industrial economies. More important, the rates of pay increase in Germany and in the Benelux countries was in the 5½ per cent-8 per cent range while in the United Kingdom, vital to our export performance, pay rates rose by just 12½ per cent, significantly below our rate of 16 per cent.

It would be foolhardy to presume that we can sustain generally, or allow sectional interests to continue, the level of nominal or money income increase that has become customary over the past few years. This would undermine the benefits of the new monetary system for us. The whole of our community stand to benefit considerably from an orderly and moderate approach to incomes. The Government will be anxious to work on the basis of voluntary arrangements to achieve this. Otherwise, our ability to compete both domestically and in export markets will be lessened and existing jobs and new employment opportunities will be lost.

There is no point in trying to hide the disciplines which the adherence to the new system will impose. To the extent that workers and management in industries observe these disciplines they will be no more vulnerable under the new system than they are now. In fact, by being able, in time, to buy raw materials and other goods more cheaply than they would otherwise have been, their competitive position could improve. But whatever about these fears I want to repeat now what I said last week. If significant short-term difficulties arise from our joining the system the Government will help in a positive and significant way.

Another argument—connected I imagine with the previous objection—is that the system will affect our chances of achieving full employment. I would like to be clear on this. If there are those who believe full employment is helped by inflation, which even at 8 per cent a year cuts the value of money in half every eight years, then I think they need to have the logic of their argument examined. Inflation does not help employment: it destroys it. It diverts investment from manufacturing and agriculture and other work which creates employment. This is not the way of economic or social advance.

Inflation is a form of taxation which, if continued, can divert an ever-increasing proportion of the nation's resources away from the people into the public purse and this happens without any direct action of Government and without even public comment. It produces strains in the relations between labour and management, of the sort we are seeing now as workers try to preserve differentials which are being automatically destroyed simply by the inequities and distortions resulting from inflationary price rises and other pressures. It is hard to believe that anyone can readily argue that investment and employment can be helped by such ludicrous economics.

A further obvious concern for the Government here has been the effect which adherence to the system would have on our relations with Northern Ireland. In my statement last Friday, I said that the move would add a further dimension to partition but that the ultimate benefits of membership of the system could outweigh the problems.

As a consequence of the decision of the British Government, Northern Ireland will not be within the exchange rate arrangement from the commencement of the system. I want to stress this—any difficulties that arise do not flow from any decision by our Government to hold back from joining a Community system. Nevertheless, we gave the most careful consideration to the implications of Irish membership, in the circumstances as they exist, for relations with the North and for progress towards the national objective of the coming together of all the people of Ireland, by consent and under agreed structures. Our conclusion was that, on balance, our participation would help progressively to expand cross-border trade and economic co-operation and to promote progress towards the national objective. More generally, the fact and economic benefits of membership should heighten the perception among people in Northern Ireland of our comparable levels of economic development and living standards and of our independent political role in Europe. I think it is fair to say that this assessment was shared by the delegation from the SDLP which I met last Friday, in company with three other Ministers.

For practical purposes, there will be no restrictions on the importation, exportation and acceptance of currency in reasonable amounts for normal, social, shopping and tourism purposes in Border areas. It may, I believe, be expected that most traders in those areas and many others also will continue to accept the currency of the other area for normal trade purposes, despite some possible inconveniences.

Participation in the system will not give rise to any new formalities in the fields of customs and excise or agricultural trade in respect of goods or produce crossing the Border. Thus, the actual impact on the general run of businesses and on the ordinary person involved in cross-Border transactions should be a good deal less than may have been expected initially.

When I said last Friday that problems could be overcome, I had in mind the conditional element attaching to our benefiting from the system as we should. If our people respond to the challenge, the benefits for North-South relations and for realisation of our national aspiration can be immense.

I turn now to the factors which influenced the Government in reaching their decision to join the new system.

The system represents a major new step on the way to the objective set out in the Treaty of Rome, "the ever closer union of the European peoples". If the system is effective and especially if it proves to be durable, it will lead towards monetary union and the launching of a single European currency. This, in turn, would have the most profound implications for the political development of the Community in the direction of a European union.

I believe that the attainment of European union could have an immense influence for good in the world. Purged of any colonial vestiges in its external policies, the European Community can provide an example to the world of the benefits of democratic government, of respect for human rights, of social progress and of a common identity and citizenship grounded on respect for the cultural diversity of its constituent parts. It can play, I believe, a major role in promoting political stability, peace and justice throughout Europe and the world at large. It can play a major role in the war on want and in helping to raise living standards in the Third World.

Internally for us in Ireland, there can only be benefit in the development of a European political entity responsible, in parallel with its member states, for the welfare of all its citizens. Some Deputies seemed to find it incredible last week that I should seriously believe in the concept of a European federal society on the lines of the USA in which there would be a grouping together of a number of peoples broadly pursuing common objectives in the interest of all. I believe that the Community can evolve to an entity with a common concern for its component parts. It is premature to talk of federalism and certainly a European union will not be the same as the major continental States, for Europe's distinguishing characteristic is its historic diversity. Already we are seeing the gradual development of a common European consciousness among the peoples of the Community, a process that will be given a major fresh impetus by the direct elections to the European Parliament.

I have been talking of long-term objectives. But one cannot hope to reach such objectives if one turns back on the road towards them. To my mind, it would have been a matter of deep regret if Ireland and Italy had to stand aside from this historic step. Had both countries, or any one of them decided not to participate, we would be faced with the danger of providing a basis for the creation of a two-tier or two-speed Community, to the detriment of all the prospects to which I have referred and to the certain disadvantage, within the Community, of the countries in the lower tier.

In the more proximate future, we can gain, in the short and medium-term from the greater expansion of trade within Europe and indeed worldwide which monetary stability in Europe should promote. A large proportion of the trade of the member states is within the Community itself. The Community is, indeed, the largest trading bloc in the world. Yet it is the only major such bloc which suffers from currency instability within itself. As this has intensified in this decade, the inhibiting effects on trade have become correspondingly more severe. For this country, with commodity exports valued at just under 50 per cent of our GNP, anything which puts a brake on trade is detrimental to our development prospects. This is not to say that the more rapid expansion of trade which the EMS should promote will automatically entail benefits for Ireland. The potential for benefit is certainly there, but it can only be realised by adjusting our income expectations to the new realities.

With our lag in levels of development and income this country needs massive investment. Our participation in the EMS can greatly help to promote this investment. First, greater monetary stability will certainly give a fillip to investment across frontiers. Again, the extent to which we obtain a share of increased investment will depend on ourselves — on our costs, on the state of our industrial relations, on the attractiveness of our industrial incentives package. If we can provide a satisfactory environment in these respects, we can attract much more of the mobile investment which is seeking locations everywhere in the world today. The scheme announced yesterday by the Minister for Industry, Commerce and Energy, will certainly give impetus to the attraction of further industrial investment.

An important part of this environment is the infrastructure which supports and may crucially affect the return on industrial and other productive investment. The financial assistance being provided by the Community and bilaterally by the more prosperous member states will help us to accelerate our investment programme in this vital area. What we have been discussing will increase both our need and capability to provide better roads and telecommunications, better housing and better transport facilities: in short, if we manage our affairs properly, a better environment in which to live and work.

Our adherence to the new system will mean discipline and it will bring risks. I am not trying to hide that. It is the business of the Opposition to highlight the disadvantages. Let them do that, if they wish to approach a national issue in that way, it is their right, and perhaps even their duty. But it is the business of Government to seize the opportunities: and that is what we are doing. We see the new system as providing the basis for an expansion of world trade and investment and renewed economic growth in the European Community. As I said earlier, our decision to join the European Monetary System was taken after the most careful consideration, without pressure or dictation from any other Government. It was an independant decision by a sovereign country in our own interests. That decision can provide us with a chance to take a rightful part in the building of that Community in which we believe: and to advance the interests of the Irish people at home socially, economically and politically. In this enterprise, we have faith in their competence, good sense and ability.

I move amendment No. 1 in the name of Deputy FitzGerald:

To delete all words after "That" and substitute the following:—

"this House deplores the Government's actions in relation to our entry to the European Monetary System and in particular:

(i) its unwise and extravagant, and anti-social, management of the nation's finances resulting in an excessive level of current deficit and of borrowing.

(ii) the resultant rise in money incomes and consumption boom, concentrated mainly on imports, and the threatened incomes free-for-all in the months ahead, coming at a time when incomes restraint is essential.

(iii) the need arising from this mismanagement for substantial external aid to enable our weakened economy to accept the constraints of membership of the European Monetary System.

(iv) the ineptitude shown by the Government in negotiating the terms of entry to the European Monetary System, and in presenting to the Dáil and the nation the results of these negotiations, and the damage done to the reputation of the State thereby, and

(v) the excessively severe measures taken by the Government with reference to financial transactions between this State on the one hand and Northern Ireland and Great Britain on the other."

Anybody who knows the history of this party or who has listened to what we have been saying about the European Monetary System over the last three months could not be in any doubt as to where Fine Gael stand in an important matter such as this. Our commitment, long before the Government party and indeed way back into the sixties, was to the accession of Ireland to the European Community and a full commitment by this country to anything that would further the integration and the advancement of the European Community. For the Taoiseach to pretend, perhaps unintentionally, that because of our motion there was some doubt about our commitment to joining, misrepresents our position. It is our duty to point out that the Government have not approached this properly. The Government's stance since coming into power in June 1977 and the way they have monitored the economy in the intervening 18 months, made it more difficult for us to obtain the best terms or to adopt the most positive posture regarding the EMS. We have pointed out continuously since then that the Government's attitude to the economy, the level of borrowing and their apparent indifference to what is happening on the wages front and on the industrial relations front inhibits growth and makes it more difficult for us to take our place in Europe.

I hope somebody from that side will clarify what the Taoiseach said in his statement this morning. The Taoiseach said:

Financial support will be required, and has been obtained, in order to offset these problems. This support should enable the public sector borrowing requirement constraint on public investment to be relaxed and facilitate in acceleration of investment,

The Taoiseach later refers to the fact that:

The essential point is that the total amount of loans to be raised under the package is not a net addition to our borrowing requirement.

These two statements could be interpreted as being contradictory and I would like somebody on that side of the House to clarify the Government's position here.

We have a borrowing requirement in 1978 of 13 per cent, and half of this will finance the current side of the budget. That is almost double what was required in the previous year and it is far higher than what is required in any other European country. It is not apparent from the figures at the moment whether this current deficit has risen or what has happened to the deficit in the capital budget. It is not apparent either how much of these figures were available to our partners when we were negotiating the terms of entry. If the current deficit has risen and if the level of borrowing that was necessary early in the year has been exceeded on the current side of the budget, that has helped to fuel the consumer boom which has been hitting this country for the last 12 months and this consumer boom is naturally effecting our imports. A large proportion of it has reached into our imports so that the figures for November 1978 published earlier this week are over one-third up on the figures for November 1977. This is in spite of the fact that one of the Government's major planks in their election manifesto was to replace imports by home produced goods at the rate of 3 per cent over three years. We are half way through that three years now and the absolute reverse of what the Government said at that time is happening. This will, of course, have a serious effect on the growth of Irish industry if this consumer boom continues. It appears at least possible, and may be probable, that imports for 1979 will be even higher.

The Taoiseach rightly referred in his speech, as did the Minister for Finance in closing the Adjournment Debate last Friday, to the fact that if we do not get our unit wage costs into line or better than those of our trading partners, and very much more so inside the EMS, then our competitive position will be worsened and our exports will fall. Indeed, there are what could be interpreted as signs of that already this year; our exports for November 1978 are up 15 per cent over November 1977 and if there is an 8 per cent inflation rate that means they have risen in volume terms by only 7 per cent. That is a tailing off in the rate of export growth increases over the last 18 months. If this trend continues there are bound to be people whose jobs will be, at best, at risk and at worst, lost. The Government have been preaching this message for over 12 months.

Every time the Minister for Finance has spoken inside this House and the Minister for Economic Planning and Development has spoken outside the House, they have drawn attention to this. Yet the Minister for Finance, in introducing his budget last year—and I have quoted it a number of times so it is on the record of the House although I cannot give the exact reference—said that the 5 per cent referred to in the Fianna Fáil manifesto, and again there was an important strand in our economic strategy for 1978, was not a figure that was pulled out of the air. It was only after much thought, much examination of the position that they decided that this was the appropriate figure for the economy for 1978. He also said that the Government would be failing in their duty if nothing was done to correct the situation that would arise if that 5 per cent was exceeded during the year. The Taoiseach this morning mentioned a figure of 16 per cent. Obviously the Government have failed in their duty because nothing has been done except to give lectures and preach discipline and talk about restraint; no positive action has been taken. This is typical of the way this Government have handled the affairs of this country over the past 18 months. They just will not make a decision on anything that might be in any way unpopular. We were told when we were in Government, probably more often by our own supporters than by anybody else, that what we were doing was unpopular. Two things that caused most problems politically was the taxing of farmers and the introduction of the wealth tax. But at least we governed; we took decisions. We did not allow situations to drift so that decisions were forced on us and that is the greatest crime this Government have committed. It might be understandable for a Government who were depending for their support on one or two Independents to postpone decisions that could be unpopular but there is no excuse for a Government who have the largest majority of any Government ever in this State.

They have been cotton-woolled by their majority so that they are incapable of taking any effective action to deal with any of the problems facing this country and of course the worst problem is the industrial relations problem. It is the one with the highest profile internationally. People in the IDA and members of the business community who go abroad say that this is the one referred to most often when the subject of establishing industries here is broached. The first question is "What about your industrial relations problems?" The astonishing thing is that the Minister for Industry, Commerce and Energy, speaking in Shannon on Monday last, said that if one ignored the transport sector, that is CIE and Aer Lingus, and if one ignored the telecommunications sector, that is RTE and the Post Office, the situation was not too bad. These are areas in which the Government themselves, if not directly concerned, certainly have enormous influence and the Minister for Industry, Commerce and Energy wants us to ignore them or to think that people who want to establish industries here will not investigate and find out that these are areas where the Government have influence and that these are the areas that the Minister wants us to ignore, and where the industrial problems are worst.

Now we come to what happened this week on our entry into the EMS. Exchange controls were introduced on Friday to be operated by the Central Bank, something that was totally new as far as the bankers and the business community here are concerned. The people they should turn to for advice on this, the Central Bank, which again is an area where the Government have influence, within 24 hours are on strike so that nobody knows how these exchange controls are to be operated; nobody can get a telephone call answered or a query answered about the most important decision made in the field of monetary control in over 60 years. I do not know if the Government have done anything about this strike since Monday. It is at the very time of year when there are more foreign transactions in money than at any other time of the year. Within a week of joining the EMS when nobody is absolutely sure about what is going to happen, no business man knows where he stands, the Central Bank is shut down. This is a Government that is running with its tail between its legs into the EMS on inadequate preparation and on terms which we believe could have been far better. This does not inspire confidence among the people whom the Taoiseach is sure will establish industries here as a result of our joining the EMS. This does not give them confidence in a Government supposed to be able to handle the affairs of the country. There are more important things taken into consideration by industrialists when deciding to set up a new plant within the grants available from Government agencies. They must consider the question of industrial relations, political stability and the effectiveness of the Government to deal with problems. Certainly, on two of those matters the Government failed badly. They have the political stability, if one calls a 20 seat majority "political stability".

Irrespective of the benefits of our joining the EMS, and there are many—the area of monetary stability is certainly most desirable as far as we are concerned—we must remember that monetary stability will extend from the Germans to us. If we want to get our rate of inflation down to the level of the Germans—a very desirable thing —what do we intend to do about that? What are we doing to get our industrial relations to the standard of the Germans? The only strike I read of in that country for many years was during last month where the steel workers threatened to strike to get the 5 per cent. The Taoiseach informed us this morning that we had wage increases in the industrial sector above 16 per cent and, if that continues, we will not be able to improve our export market to Germany. More important—this could be one of the disadvantages of the EMS—if we accept that position the Germans will be able to export to us at more competitive rates than at present.

At the Bremen meeting the idea of the monetary system was floated and the attitude of the Government afterwards was over-enthusiastic. I am not sure that sufficient work was done at Community level to establish the EMS but I am certain that sufficient work was not done here. The Taoiseach this morning read out a list of the discussions he had with other heads of state after he was prodded into doing so by the Leader of the Fine Gael Party, although it is possible the Taoiseach had the intention of doing this and did not want to make that intention public. We were told then by the Tánaiste that the price of our entry into the EMS was £650 million if the UK did enter and that it would be much greater if the UK did not join, but we still have not been told—as far as I know—how this figure of £650 million was arrived at. Have we told any of our partners in the EEC how any of this money was to be spent? Was this part of the negotiation that we would get £50 million on this, £100 million on another and so on? Evidently that was not the position if we were to judge by the Taoiseach's speech on Friday when he told us that Government strategy for the attainment of these objectives—lowering of inflation and full employment in the EMS—under the new monetary regime would be outlined in detail in the White Paper on National Development to be published shortly and in the budget early in the New Year.

Anybody looking for support in money, an individual, a businessman going to a banker, or a Government, must outline what the money is required for in the first instance. In my view we would have had to have a list of how much we wanted for each specific area of the economy and why it was required for those areas. Even at this late stage that list has not been provided. We were told of the difficulties, after the Brussels meeting, of finding ways of supplying money to this country. The Leader of the Fine Gael Party, in private—he may have made the statement in public—outlined the structure of the regional fund after we were told in press reports that one of the difficulties that arose at the Brussels meeting was because agreement could not be reached between the British and French Governments about paying money to the UK, Italy and Ireland out of the regional fund. The Leader of Fine Gael, who had the experience of negotiating that fund, knew that the regional fund was composed of two parts, one part to be divided between all countries in fixed proportions to each country and the second was a special allocation to Ireland, small but special. He saw, and brought to the attention of the Taoiseach privately, that there was a possibility that this amount of money for Ireland could be expanded without interfering with the allocations within the bulk of the fund to each country. It may not have been possible to adopt his suggestion but we do not know if it was tried. It was dismissed, or misunderstood, by the Government last week when it was brought to their attention. On Friday last the Taoiseach dismissed the reference to the regional fund money as being an insignificant amount.

However, that was not the point at all. The point was that there was a splitting of the regional fund with Ireland in a special category and the possibility that that special part for Ireland might have been expanded to allow us get more money. I do not know whether the suggestion was followed up. If it was not, it ill behoves any leader of that Government to come in here and lecture the Opposition about the national good and patriotism if, when in good faith, suggestions were made privately to him——

I am sorry to interrupt but did the Deputy say "privately"?

Mr. Barry


Deputy FitzGerald said it publicly in the debate last week.

It was said privately three days earlier.

I endeavoured to pass on the suggestion but if it did not reach the Taoiseach I am sorry.

If there were intended to be private contacts, they should not be discussed here. I would retain a confidence and would expect others to do the same.

He mentioned it in the House subsequently——

The Taoiseach mentioned it in this House before Deputy FitzGerald did last Friday. I said the first time the EMS was debated here that this was not a Fianna Fáil-Fine Gael-Labour matter, that it was in the national interest and that we should try to approach it so that we would get the best deal for the country and I still believe that. I hope that any suggestions made either privately or publicly, will not be thrown back in our faces and dismissed as being unworthy of consideration. I still believe the regional fund is possible of extension in this regard.

Whoever is replying to this debate might tell me why the wider band was not chosen. The only indication of this I can find was in a report in last Tuesday's The Irish Times in which it was said that “immediately after informing the EEC Council of Ministers that Ireland will join the European Monetary System on the narrow fluctuation band, 2.25 per cent....” Do we intend joining at this band? Have we so informed the Council? If that could be done last Tuesday, why were we not told that we were joining in the narrow band? I did not see it, but I was told that when the Tánaiste was questioned on a television programme last Friday he evaded answering that point. He said that it was the Government's hope and expectation that our membership of the EMS, without the United Kingdom, will not in practice involve a divergence from parity with sterling for some time at least.

I should have thought it would have been seen as a desirable objective on the Government's part to maintain the one-for-one link with the pound sterling because a divergence from that would obviously affect not just cross-Border trade but trade between the two countries. In our place that represents about 50 per cent of our trade and we are the United Kingdom's third largest customer. The more stable we can keep that trade the better. If it was thought desirable that we maintain this one-for-one link with sterling, why did we not choose the wider band?

I am advised that there is a greater risk of speculation against the punt in the narrower band than in the wider band because the risk of breaking within that band is greater. For example, the United Kingdom has said that she will maintain her relationship with the central rate whereas we have to maintain our rate with each individual currency. If the central rate is 100 and the Danish kroner goes to 102 and at the same time the pound sterling falls to 99, there is a 3 per cent gap between the kroner and the pound sterling, which does not necessarily mean that the United Kingdom is out of line with the central rate. We have to maintain within the band the two and a quarter ratio with the kroner. This means we are now at 99¾ and the British pound is three-quarters of 1 per cent less valuable than ours. That might seem small but it means a break in sterling. It also means that British goods, by that very small amount, are more competitive inside this country and our goods are harder to sell outside. There are many firms—the textile industry immediately comes to mind—where even that small fraction between the Irish pound and the pound sterling could mean the difference which would make them uncompetitive, with a consequential loss of jobs.

I hate to interrupt the Deputy, but the example he gave was of two countries within the narrow band. That divergence arises simply because they are in the EMS and Britain is not. It has nothing to do with whether we choose the narrower or wider band.

If we had chosen the wider band we would not have had to break with sterling. If we remain in the narrower bands we are compelled to break with sterling.

I would like the Tánaiste, or whoever is replying, to explain why we chose the narrower band. Was it one of the conditions attached to getting the extra £25 million a year? Were there any other conditions attached to that £25 million? What concessions were made to the Italians when they decided to join? Did we know those concessions before we took the decision to join? Are the concessions we got better, worse or on a par with what the Italians got? These questions must be answered. This morning the Taoiseach said he could give very little extra information over and above that given last Wednesday and Friday. If we are to come to a decision that the conditions, terms and time of entry are correct—outside the principle of entry of which we completely approve—we must have these facts.

I do not know why exchange controls were introduced last Friday. It was said when the Exchange Control Bill was going through the House that it might not be necessary, but there was subsequent comment that if it was introduced it would be most benign. All this week commentators said the controls will be extremely severe, although the Taoiseach said this morning that that was not so. Anybody who had to operate these controls said they were severe and that was the opinion of many people who were at the briefing given by the Central Bank last Friday. The document issued was obviously prepared in a hurry. Apparently it was a very sloppy document and many amendments were made to it during the discussion. Clarification of it was being sought up to late Friday night or Saturday morning. It had been redrafted but still has not appeared. The opinion of many of those who attended that meeting was that the Central Bank were not in favour of exchange control but that the Government panicked and insisted on exchange control. If this is the situation will the Government tell us why they insisted on exchange control when the British did not consider it necessary or is it being used here because the UK said that if it was not brought in here or that if it did not have strict terms attaching to it, they would bring it in?

Perhaps there has been more talk in this House about the EMS during the past three months than there has been about any other subject ever debated. So far as this party are concerned we are totally in favour of EMS because we can see the benefits for this economy of monetary stability but we are concerned that not nearly enough work was done at Community level and that not nearly enough preparation was undertaken by our Government on the whole issue. I have asked a number of questions here and I trust that they will be answered from the Government side because both the Dáil and the public are entitled to the information we are seeking.

The Government jumped at the chance of joining the EMS because they saw in it a chance of getting some extra money even if this is to be only a fraction of what they said was necessary but it is enough to help them solve their budgetary problems. They saw, too, in the EMS a possible means whereby they could escape from their rash promises of 1977. But these are bad reasons for joining the EMS. Having said that, I reiterate that the principle of monetary stability is good and that the more integrated the Community becomes, the better. That is an objective we would aim for. However, to quote T.S. Eliot: "And this is the greatest treason to do the right deed for the wrong reason".

I should like to take the Taoiseach up on his opening remarks when he called for a different approach to this debate from the approach used in previous debates on this subject. Unfortunately, the Taoiseach went on to ignore his own advice and continued in a most petulant manner as was the case last week. However, that will not be the approach of this party. While we have been and remain extremely critical of the handling of the negotiations leading up to our entry to the EMS and of the heavy price we believe the Irish people will have to pay for the incompetence of the Government in this matter, we intend now to try even at this late stage to minimise in so far as possible the effects on Irish industry and on Irish business of the Government's mishandling of the situation.

I do not know how productive will be our constructive approach. We are opposing the Government's motion on the basis that a sufficient transfer of resources was not secured to protect Irish business and industry. As the Taoiseach has requested, we intend putting forward our proposals because we see these proposals as being the only possible salvation not only in regard to the EMS but in regard to the future development and full employment aspirations of the Irish people. Those proposals will be based on our socialist philosophy. We do not intend going over old ground but I noticed that while I was speaking last week in an effort to secure this debate—and this was difficult because of the Taoiseach's reluctance to give the House an opportunity of discussing the terms on which he had decided to enter——

My offer to have the debate either last week or in January was rejected.

Last week the Taoiseach attempted to steamroll a debate on this issue through the House in conjunction with an adjournment debate but we successfully resisted that attempt.

The Deputy need not claim any credit for that. I could have had the debate had I so wished.

The Taoiseach was too cute for that. He had a majority of 20 votes but he also had the political cuteness.

I seem to have some merit.

Deputy Cluskey on the motion.

If the Taoiseach wishes to regard political cuteness as merit, he may be my guest.

Let us discuss the motion and not the Taoiseach's political cuteness or otherwise.

Certainly not his merits.

When I was securing this debate for today the only contribution from the Taoiseach's 83 comrades in the back benches was by way of a chorus of howls and shouts that the Labour Party had adopted the same approach towards our entry to the EEC. Perhaps the Irish people would be a little more receptive now to what the Labour Party were saying then because, unfortunately, the Utopia that was talked about by Fianna Fáil during the referendum on that issue has not been evidenced to any great extent. Indeed, the points we put to the electorate at that time have proved to be all too valid. Our membership of the Community has resulted in a considerable number of redundancies and closures and in a weakening of our native industry. In addition, it has contributed substantially to price increases. During that referendum campaign we pointed out that the aspirations in the Treaty of Rome regarding the transfer of resources from the regional fund and the social fund would not materialise and that the emphasis within the EEC as it was structured then and as it is structured now would lead to a development at a fairly rapid pace of the commercial and trading aspects of the Community, and that the social aspects, the transfer of resources from the richer to the poorer regions by development of the regional and social funds, would be very slow. Those predictions by us during the EEC referendum have unfortunately for us, proved to be true.

The Taoiseach's speech this morning was very reminiscent of the same sort of misleading picture we got from Fianna Fáil in relation to our EEC entry during the 1972 referendum. We anticipate with confidence that when the direct elections to the European Parliament take place next June the people will recall that it was this party alone who pointed out the way the country was being misled by Fianna Fáil in that referendum and that Fianna Fáil were responsible for our negotiations for entry and for our joining the Community.

The only benefit in real terms we have had from our membership of the EEC has been through the operation of the common agricultural policy. This party have supported that at European level but we have been, and will continue to be, highly critical of the Government for their lack of a sense of social justice, their lack of effort to redistribute within our national community the benefits that have accrued through the operation of CAP. The Taoiseach went to considerable lengths last week to try to distort the situation again. Fianna Fáil have weakened the operation of the CAP and by their gross mishandling of the negotiations for entry into the EMS they have given an opportunity, which will undoubtedly be seized by the British Government, to undermine the operation of the CAP. When that time comes I will again point a finger at the Taoiseach and his team of negotiators because they will be primarly responsible for what I believe will unfortunately be a successful undermining of the operation of CAP by the British Government as a condition of their entry into the EMS at some future date.

We have seen some indications of it already and also some indication of the Taoiseach's awareness of that vital and costly mistake which he made during the gross mishandling of the negotiations. Last week the Taoiseach said that incomes for the farming community would not be as high as they had been in recent years. That was one indication. We also have a little indication in the Taoiseach's speech this morning. After the failure of the Brussels negotiations by the Government I said that two things had happened, firstly, that they had directly led by the mishandling of the affair to a two-tier Europe. The Taoiseach and his Ministers pushed that aside. We said that was talking nonsense. This morning in the Taoiseach's speech we now have Fianna Fáil trying to take credit for not allowing that to happen. The Taoiseach said:

Had both countries, or any one of them decided not to participate, we would have faced the danger of providing a basis for the creation of a two-tier or two-speed Community, to the detriment of all the prospects to which I have referred and to the certain disadvantage, within the Community, of the countries in the lower tier.

The Taoiseach is this morning acknowledging that I was correct when I said that their mishandling of the Brussels negotiations had enhanced very considerably the prospect of a two-tier Europe.

I mentioned the question of the CAP and I spoke at some length in the House on the way the Government's mishandling of the situation has undermined the continuing of the present arrangement with regard to CAP. The Taoiseach and his Government will probably get co-operation up to 7 June next. That is the target date. They will keep it secret up to then. Their attitude is not to let the Irish public know how much their future has been undermined by the gross incompetence of the Government. The Taoiseach this morning again acknowledged that he realises the danger to CAP which this carry-on has led to. He said:

These meetings and other informal contacts resulted in the clarification and arrangements of which I have given the House as much detail as I am free to disclose at this stage.

The Taoiseach stated in relation to the CAP:

In relation to the CAP the Council of Agricultural Ministers agreed that the technical consequences of EMS should not affect agricultural price levels or the distribution of MCAs. Unfortunately this issue got linked to some others which could not be resolved at this week's meeting and the whole question has been left over until the January Council Meeting. In the meantime agricultural arrangements will remain unchanged.

That is Lynch speech brought to an art because it is a clear indication that they are trying subtly to prepare the way for what I unfortunately believe will happen.

I do not want to cover old ground but I believe it is necessary to look back to try to assess where we are now in relation to what is taking place. Where did the figure of £650 million come from? What is it for? The only thing we know is that this figure was mentioned by Fianna Fáil as essential for the protection of Irish industry and Irish jobs if we were to enter the EMS. We were told that this figure was not only essential in the amount but also in the form it would come to us. It was also essential, according to Fianna Fáil at that stage, that the figure of £650 million would be by way of grant. Several steps down from that situation have been taken since then. We should put on the record of the House what the Government's White Paper said in relation to our entry to the EMS. When the Taoiseach states that "these meetings and other informal contacts resulted in the clarifications and arrangements of which I have given the House as much detail as I am free to disclose at this stage" does he mean that the situation is in the Irish Parliament, democratically elected, we are being asked to endorse one of the most important Government decisions, which they have already taken, without being given full details and full information of which the Taoiseach and the Government are in possession? It is the only conclusion one can come to given the Taoiseach's statement this morning: "...such detail as I am free to disclose". Are we being asked to endorse a decision of this magnitude in such circumstances? During the whole affair of EMS the Government did not know but now it has developed a stage further and information is being deliberately withheld from the House, information to which we and the Irish people are entitled.

Page 7, paragraph 10, of the White Paper states:

Ireland informed its Community partners that it was estimated that, on the assumption that all member states would participate fully in the system from its establishment, additional Community aid of the order of 200 million EUA (£130 million) a year over a five year period would be required.

We are now told that, if all member states participated, it would be essential to our interests to allow us to protect our jobs and industries to get £650 million transfer of resources. It is now even worse than when the £650 million was mentioned, because all member states have not participated. The United Kingdom is not participating at this stage and it was claimed, and rightly so, that if they remained out this country would need substantially more than £650 million.

It goes on:

They were also informed that this estimate—which was approximate——

It was hardly approximate: a transfer by way of grants of £650 million or in excess of that figure to us, paying for the privilege of joining the EMS, a fact that was arrived at here this morning.

was arrived at after a detailed review of the programme of public investment aiding infrastructural and industrial development and the process of its implementation.

That figure is based on a detailed review of the programme, but where is it? If it was given to the other member states surely the Irish people are entitled to it since they will be paying the price for the mishandling of the whole affair. Paragraph 11 states:

Because of the need to expand capacity and to improve the rate of growth of productivity, the Government specifically requested that Community aid should aim to support additional investment in infrastructure and industry.

I would like clarification on this. It is essential to know the answer to this. It is not given in the Taoiseach's speech. There is only gobbledygook in that which nobody could interpret.

Paragraph 12 of the White Paper states:

Ireland indicated that grants were the preferred form of Community aid for the reason that it was the Government's aim to reduce the borrowing requirement as a percentage of GNP, an aim supported by the EEC Commission and in accordance with Community guidelines for Ireland. Its importance——

that is, to reduce our percentage borrowing of GNP

——would, if anything be greater in the context of EMS membership.

That is the Government's thinking according to the White Paper: that, while it was their intention all along to reduce the percentage of GNP borrowing, in the context of joining the EMS, which we have now done, it is even more important. If there is a switch there, there is a contradiction. Do the Government intend to pursue the commitment in their manifesto of reducing our foreign borrowing in relation to GNP from 13 per cent to 10½ per cent this year and to 8 per cent next year? That decision by the Government and what they intend to do as regards that aspect of their policy is essential to the future of Irish jobs. Surely that is something they know and can tell us. Surely it is not being kept a secret from this House as so much is being kept secret. Is it the Government's intention to honour their commitment as regards reducing the percentage borrowing of GNP? If it is, they should let us know because certain consequences will flow from that decision to Irish industry and jobs. That decision is crucial to the whole point.

One could make such a case to the other eight member states of the Community for only one of two reasons, and one must be correct. One could be trying to get a transfer of resources of £650 million by distorting the factual situation with regard to one's requirements. One would be misleading the other member states in making that case to them if it were not necessary for the transitional period. I do not accept that we did that. I do not believe an Irish Government would go before eight other heads of Government and make a false case for a transfer of resources from the richer to the poorer parts of the Community. The only other conclusion I can come to is that it was necessary to get this transfer of resources in order to protect Irish jobs and industry, that it was essential to the future development of our economy. They failed to get it. By failing to get it, they have jeopardised our chances of developing our jobs and employment prospects in the future. I believe that is the fact. They did not mislead anyone, but they failed miserably and Irish workers and industry will pay very dearly in the years to come for that failure. Every effort will be made to utilise the loans we have got to conceal that failure at least until after the next general election. But, failed they have and pay the price we will. The price unfortunately will be a very heavy one for Irish workers.

The Taoiseach was very definite that we could not join under the terms that emerged from Brussels. We entered into what were described as negotiations for some additional transfer of resources to this country in order to allow us to join the European Monetary System on 1 January next. What have been the additional resources that have been transferred to us and how were they obtained? I repeat what I said here on Friday last—they are of little benefit to this country. They constitute a very marginal improvement, even in money terms, on what emerged from Brussels. They were got as a political face-saver for Fianna Fáil and obtained at great cost to the dignity of this country as a nation. The manner in which they were obtained and the price we paid was to degrade Ireland. That is the charge I make against the Fianna Fáil Government who have always thought that they had a monopoly of national interest or concern with, at times, their very distorted view of what patriotism is all about.

Ireland has been degraded in this attempt to obtain a political face-saver for a Fianna Fáil Government, not in the interests of the Irish nation. Out of the £51 million spread over two years, as far as we can ascertain, as far as the Government will tell us—and we are entitled to assume and I believe correctly—it is all by way of additional loans over and above the £1 billion. If it is not, we are entitled to be told in clear terms not only that it is not all by way of loans but what the terms of the loans we are getting, what percentage is by way of grant and what conditions have been laid down by the member states of the EEC who contribute in this way. Germany has given half of it. That leaves five or six other countries who have thrown something into the hat that was passed around for this country.

It is very difficult to cite an example of what has happened. One that does come to mind is that we have all, particularly those of us in public life, at times been persecuted by somebody seeking a loan from us. Again we have all, on occasion, agreed: yes, get four or five fellows and I will sign for £20 in the bank because, if it goes bang, £20 does not mean that much. It gets that person who has been persecuting you, knocking at your door and telephoning you at your office, off your back. That is what has been done to the Irish nation by obtaining this political face-saver. As a nation, Kathleen Ni Houlihan, we have been put in the same category as that fellow looking for the £100 loan and persecuting each and every one of us in order to get it and sign for him at the bank. As far as I can ascertain that is what has happened. They have not given us a transfer by way of grant.

The Taoiseach indicates clearly that these proposals and arrangements have to be discussed and finalised with various EEC institutions and banks. Therefore, what we have is not a transfer by way of grants but a reluctant agreement by the other five or six member nations, including Luxembourg, to sign for a loan from the bank for us. That is what we have secured. However, the Government have decided that we are joining the European Monetary System. It is this party's business and intention—after the mess made of it—to minimise as far as is humanly possible the effects of that decision on Irish workers.

In regard to the question I asked: is it the intention of the Government to adhere to their manifesto commitment to reduce borrowing this year from 13 per cent to 10½ per cent and next year down to 8 per cent of GNP, might I ask further: what effect will this have on Irish employment if they intend to honour that commitment? Looking at our current and predicted growth rate one could not be very encouraged and certainly not from what we have achieved so far. In 1978 we had an approximate growth rate of 6¼ per cent or 6½ per cent. With that growth rate of, say, 6½ per cent we have approximately 98,000 people unemployed and 14,000 people who have emigrated because they were unable to find employment. That is with a 6½ per cent growth rate, based on an artificial consumer boom which this irresponsible Government unleashed on this country in their mad grab for office, and for which we are all going to have to pay the price. But there are predictions in regard to our rate of growth. For example, the Economic and Social Research Institute have predicted that in 1979 our growth rate will be approximately 3¼ per cent if we joined the EMS with grants. We are joining the EMS, but not with grants. The ESRI were talking in the context of what the Government were talking about, in the context of £650 million worth of grants. We have not obtained that. If anything some of the ESRI assumptions, which are not all correct, which time has shown to be incorrect, worsen that prediction of growth next year. In addition, the Economic and Social Research Institute in their Quarterly Economic Commentary, September 1978, have this to say:

For 1979 the assumptions underlying the forecast are crucial. The position with regard to the Bremen proposals is discussed in an appendix but the specific assumptions incorporated in the body of the Commentary are that Ireland will enter the proposed European Monetary System (EMS) and that there will be no transfers of a grant nature. It is further assumed that Government will reduce the borrowing requirement more gradually than previously assumed.

We do not know. That is why I have asked the Taoiseach will he, for God's sake, let the country know now what is their intention with regard to foreign borrowing. As they are committed to doing in their manifesto, is it their intention to reduce foreign borrowing because that decision will have very definite consequences on future employment and the development of our economy? The growth rate in 1978 is approximately 6¼ per cent or 6½ per cent and it is confidently predicted that this rate will be cut almost in half in the coming year. What are the consequences for employment in 1979 and 1980? The effect will be very substantial. According to a report I heard this morning on the radio, the OECD—an international body dealing with some 24 countries—predicted our growth rate in the coming year as approximately 4 per cent.

So it is going up.

No, it is coming down fairly substantially. The irresponsible Minister can be jovial about the fact that this professionally competent and impartial body, who have no axe to grind, predict that our rate of growth in 1979 will be 3¼ per cent. As the Minister knows, the OECD tend to give the benefit of the doubt and this is all they can predict.

These cuts in our prospects of economic growth do not happen by accident but because of decisions made and implemented by the Fianna Fáil Government, and I emphasise that the consequences will be quite considerable. They have called the tune but the workers in Irish industry will pay the piper. They went bald-headed for power irrespective of the national interest and of the effect it would have on our economy and our industry or on the tens of thousands who cannot find employment. There is only a limited amount we in this party can do about that, but we will point out why this has happened and that it has not happened by accident or because of events outside the control of the Government. It happens because a Fianna Fáil Government are rigidly pursuing Tory policies in both the economic and social fields.

We are told of the terrible consequences of our entry to the EMS if we do not exercise discipline. There was not much discipline shown by Fianna Fáil in their manifesto, but now the gospel of the day for Fianna Fáil is national discipline. I notice they mention the word "discipline" only in relation to one section of the people. From the Taoiseach down, they talk about the trade unions. One can hardly switch on the television or radio or pick up a newspaper without finding evidence of trade union bashing by the Government. It is a subtle form of union bashing in an effort to find a scapegoat when the consequences of Fianna Fáil Tory policies are felt. They are now in the process of setting up the trade union movement as a scapegoat. Is there any reason for the Taoiseach or any of his Ministers, either collectively or individually, not to agree that we have a highly responsible trade union movement? Does the Minister agree or disagree with that statement? He is silent.

I agree that the movement is responsible, but some members of it are not. If they were, there would not be so many disputes and stoppages.

I will be calling the Minister next.

Anyone who looks objectively at the record of national wage agreements during the past few years would have to say that we have a highly responsible trade union movement, and we are fortunate in that. They have not such in every other country, even within the EEC. When the trade union movement, in good faith and after collective bargaining, entered into national wage agreements they honoured those agreements.

There is no question about the fact that there have been unofficial strikes. I condemn such strikes as much as anyone else because I do not believe they are in the interests of the trade union movement or of organised workers. I do not believe they are in the interests of the people generally. But when unofficial strikes occurred, who resolved them? Who were the only people who showed any real interest in bringing them to an end? The answer is the trade union movement. If one looks at the unofficial strikes which have occurred during the past few years and examines how they were resolved, one will see that in almost every case they were resolved as a result of action and hard work by the Irish Congress of Trade Unions and their affiliated organisations. We can be definite that they were not solved by the present Minister for Labour.

That is right. The Deputy does not want him to interfere with the legitimate role of the ICTU.

In a Cabinet who are not noted for their energy or activity, he is outstanding for his lack of activity. It would be very difficult to know whether he is on strike, official or unofficial, because he very seldom moves fast enough to be able to tell whether he is or not. The Government need to be more careful in the operation of setting up the trade union movement to carry the can for their incompetency. The trade union movement are responsible, and if the right policies were put to them the Government could secure their co-operation towards the achievement of full employment. That will not be achieved in the existing circumstances and in the climate this Government are responsible for creating, not only on the industrial front but between various sectors of our society.

Looking at Government policies it is not difficult to realise why there is not much prospect of a new national wage agreement at this time. There was the elimination of wealth tax, the easing of capital gains tax and the statements in the Green Paper that there will be a cutback in public housing, tax on children's allowances, the abolition of food subsidies, a cutback in education and in every area that could be of benefit to the working class man. This is against the background of the abolition of the wealth tax and car tax and the raising of the expectations of the workers by the irresponsible manifesto that brought Fianna Fáil into office. National responsibility was thrown overboard totally in their mad rush and gallop to get into office. They have office now and watching them since June 1977 has not been very edifying or encouraging for the Irish people.

If we are to escape the worst consequences of this mishandling—for want of a stronger word—of our negotiations for entry into the EMS, there are certain things that can be done to help us overcome the extremely difficult time that looms ahead of us as a result of the terms of entry. The Taoiseach has asked us to approach it in a somewhat different way than we have in past debates. The Labour Party are stating what we believe is necessary at this stage to try to minimise the effects of the bungling of our negotiations. I put the following points on behalf of the Labour Party and we believe they should be pursued now. There should be a radical change in the Government's policy and approach if we are to escape those consequences.

Before setting down what I believe should be our approach, there are a few questions I should like to ask the Minister who is present in the House. We have monetary exchange control and it is estimated that there is approximately £280 million in banks in the United Kingdom in private accounts of Irish citizens. If I understand it correctly, it is now the law that such private accounts should be repatriated to this country within three months. Money that is in England for investment purposes will not be affected. We are talking about people who have opened one, two or half-a-dozen private accounts in British banks in the UK. There is only one reason why people would do that—although there may be a few exceptions—and that is that they are engaging in tax dodging, they are evading paying their tax in this country.

In the past Fianna Fáil have been extremely well disposed towards people who have evaded payment of tax. They gave a present, a gift, a prize to people who fled this country during a period which Fianna Fáil described as one of economic crisis. When Fianna Fáil came into office they gave such people a present by abolishing wealth tax. A statement has been made—and I should like to know what it means precisely—that these people who transfer their accounts within three months will be immune from any tax that they may have evaded. Is that true? Are we now going to be in a position where we can clearly identify people who have been deliberately evading paying tax to the Exchequer? Are Fianna Fáil now in the process of giving them immunity for that tax evasion? The amount of tax that would accrue from £280 million would be very considerable but it is not just the money that is involved. What is involved is the whole approach of this Government. In fairness to them they are consistent. They have consistently pointed towards the privileged, the evader, the speculator and towards all the worst things in Irish society. This is just a further indication of that approach.

Although the Minister for Finance refused to commit himself on the matter in the "Frontline" programme last Thursday on television, I understand —and it is all one can do in most aspects of this debate because we cannot get any clear answers from the Government—that we have opted for the 2¼ per cent band instead of the 6 per cent band. Why did we do that? There may be a perfectly good reason but I do not know. The only reason I have heard advanced is that it would make it more difficult for money speculators to get at the punt. Possibly that is the reason but I wonder if it offsets the danger? It is extremely important that we maintain parity with the UK, that the pound and the punt should remain on a par. It is far more likely that it would go out of parity within the 2¼ per cent band than within the 6 per cent band. My question is, if we have opted for the 2¼ per cent band, why? Secondly, was it a wise decision? There is a big question mark over that.

I should like to ask another question and in this connection the Taoiseach indicated that it was not a wild suggestion but that it was a possibility. What happens if we cannot stay in the EMS and have to leave? In his statement today the Taoiseach said, "... if the system is effective and especially if it proves to be durable". He put a question mark over the matter by using the words, "if it proves to be durable". It indicates that it may not so prove, that it may collapse or that individual countries may not be able to stay within it. We could be one of those countries.

In the lifetime of the old "Snake" I understand that France entered the system and left it on two occasions. It is possible, in theory at any rate, for us to leave the EMS. In such event what happens with regard to repayment of the massive amount of money we are borrowing at 6 per cent for entry into the EMS? Is there a fixed rate of exchange being negotiated by the Government or has that been something that the Government have overlooked completely? Have they foreseen the possibility that we might have to leave the EMS, after we have been forced to devalue the punt? How are we fixed then with regard to the repayment of over £1 billion that we have borrowed at 6 per cent? Would we have to pay massively more on a devalued punt or have we at least had the good sense to negotiate a fixed rate of exchange for repayment? The answer is given by the Minister's silence.

All these things are denominated ECUs.

That is another aspect of negotiations which the Government overlooked, to our possible future detriment. What are we to do now that we are in the EMS? Surely we will not continue the policies the Government have been pursuing up to now. We have seen some, although not all of the results of that. All the bad news has not hit us yet. The State must be given a primary role in generating employment and must not be subordinated to a support role for private enterprise. To this end, a national development corporation with adequate financing should be established and charged with the task of creating new employment either on their own initiative or in conjunction with existing State and private companies. A national economic and social plan should be developed on the basis of consultation with all of the social partners, particularly the trade unions, with the achievement of full employment as its first objective.

We should also develop an equitable system to ensure the redistribution of wealth so as to obtain the support of the trade unions for a national plan to restore equality in social policy. The wealth tax should be restored, capital gains tax should be strengthened and all evasion of income tax ended, and not encouraged, as it is apparently at the moment by the three months' return. Such a policy would also require an end to the present discrimination against the lower income groups.

There should also be an extension of worker participation in industrial and commercial organisations as an integral part of incomes policy if such a policy is to have the slightest possibility of success. If this is not done an incomes policy will be reduced to a wages and salaries policy which will eventually be imposed against the will of the workers with negative effects on productivity. We should also develop new enterprises both public and private based on the utilisation of national resources with emphasis on value added industries in food processing, engineering and fabrication. The public sector should be expanded in the areas serving social needs such as health, education, housing and transport with particular attention to halting urban decay in our main populated areas. This party believe that this packet of economic measures would secure widespread public support and would lay the foundation for the creation of full employment at some not too distant date.

The policies the Government have been pursuing will be disastrous. Our entry into the EMS under the terms which the Government have negotiated, which are a massive facility for borrowing money at 6 per cent, combined with the policies that the Government are pursuing will prove to be detrimental to the economy, to industry and to the creation of jobs. The money that the Government now have at their disposal will be used in this coming budget not to further national interests but to further Fianna Fáil interests and Fianna Fáil electoral prospects. We will not get the kind of budget which Fianna Fáil said was necessary in the national interest. The coming budget will push aside the national interest in the interest of Fianna Fáil electoral advantage. This money will allow the Government to put off the evil day. There will probably be no cut in borrowing, not because the Government have changed their mind in regard to the national interest. That was Fianna Fáil's approach not ours. Fianna Fáil said that in the national interest it was essential to cut borrowing from 13 per cent to 10½ per cent but what that entails in relation to public expenditure, are cuts in the various social services. I doubt that the Government will be as enthusiastic now in view of the coming European direct elections and the local elections to start cutting the food subsidies. On consideration the Government will probably think again about taxing children's allowances.

I have watched Fianna Fáil over the years and I have noticed that if on the one hand an advantage is to be had for Fianna Fáil and on the other hand there is a genuine advantage in the national interest which could be detrimental in the short term to Fianna Fáil electoral chances, when Fianna Fáil balance things up, according to the criteria invariably used, the national interest comes in a very bad second. What I have observed over the years is becoming increasingly obvious to the people.

The Government have done a very bad three months' work. They obtained nothing except massive loans at a 6 per cent interest rate. In order to get a change from the decision in Brussels on the night of 5 December, to try to get a political face-saver, the Government have degraded Ireland before not only the members of the EEC but before the international community. The Government have endangered the operation of the common agricultural policy and have put in jeopardy tens of thousands of jobs and a substantial number of industries. This will be seen to be the net result of the Government's policy, of the Government's negotiations and of the Government's acceptance of our entry into the EMS.

Will the Deputy move the amendment?

I move amendment No. 2:

To delete all words after "That" and substitute the following:

"Dáil Éireann rejects the terms of entry to the EMS negotiated by the Government as completely inadequate to maintain and expand Ireland's economic and social development."

I have been listening with some interest and a certain amount of amazement to the remarks coming from the Opposition benches. I will find it difficult to deal adequately with all the remarks in the very limited time at my disposal but there are a number of points I will try to illustrate and emphasise.

The time allowed for this debate illustrates one of the issues between the two sides of the House. It will be recalled that last Friday the Taoiseach offered an immediate debate if the Opposition parties so wished. We could have continued on Friday night for whatever length of time was required but the Opposition parties refused that. The Taoiseach offered a debate at some agreed date in the new year and the Opposition refused that. The Whips were given an opportunity to discuss it so that we could point out the reasons for this approach rather than the, in our view, mistaken approach of the Opposition parties in insisting on a debate this week.

Why did we adopt these approaches? Why were there offers made either of an immediate debate or a later one? The answer lies in the whole question of when our formal notification or our intention to join the EMS was required. That formal decision and formal notification had to be given by Monday of this week. The Tánaiste so did at the meeting of the Finance and Economic Ministers on Monday last. That information was conveyed and was available to the Opposition parties. If their argument was that they needed an urgent debate so that the House and therefore the Irish people would have an opportunity to have the benefit of their contributions, their advice and their opinions before any final decisions were taken, then they should have had a debate not later than midnight on Sunday. But they refused that. Still they want a quick debate. Why? I cannot see any reason why. There will be no immediate, urgent decisions of which I am aware. Most of the details and most of the consequential arrangements to formalise the arrangements of the loan agreements, the interest subsidies and so forth will be finalised in the period from now until 1 April. So there is a period up to 1 April during which the Commission can complete their proposals and arrangements in that area before the Council of Ministers need to take final decisions. So, at a reasonable guess, one could say that any time between now and mid-February would be more than adequate for a careful, relaxed, informed debate on this subject because if we selected a later date sometime in the new year there would be more information available and there would be more opportunity for the Government or any other interested party to provide information on the events as they developed. But no, for some mysterious reason best known to themselves, because they certainly have not succeeded in conveying it to anyone else, the Opposition parties were able to agree that they did not want a debate before the decision was taken but they did have to have it before Christmas. I would suggest that that is symptomatic and typical of the confusion which has reigned on the Opposition benches in regard to the whole approach to this EMS debate. I might say that perhaps this whole idea of a quick and immediate debate is an attempt to drum up an atmosphere of action, to generate some noise and indeed perhaps to generate some confusion so that in that confusion they could obscure the fact that they have been so wrong and have themselves succeeded in making so many errors of interpretation and making so many mis-statements of fact during the preceding weeks and months.

I think I have said enough to emphasise the point about the timing of this debate. I just want to repeat that I see no point in it today and therefore I make no apology, speaking for myself, for the fact that we have speakers from the Opposition benches asking for additional information and asking for replies to questions. How are we expected to provide all of this additional information and replies to questions when no one has ever consulted us as to the length of time that would be appropriate or tried to reach any sensible agreement as to how best to deal with these various points? But no, in their wisdom, or in their confusion, perhaps in their arrogance, the Opposition parties always know best and must always select the timing.

The Minister selected the timing.

No, Deputy FitzGerald and Deputy Cluskey insisted last week on having a debate this week. Across the floor of the House the Taoiseach tried to persuade them not to have it.

The Taoiseach suggested having a debate in January after the decision was taken. The Minister chose today, Thursday.

I suggested that we should have a debate immediately before the decision was taken but the Opposition parties wanted the debate this week.

We wanted a debate before the end of the year, before a decision was taken because the Taoiseach guaranteed us such a debate.

Had the Deputy been in the House when I began my remarks he would have heard me say that the last day for formally signifying our intention to enter on 1 January was last Monday and if he wanted a debate before the decision he should have had it before last Monday. That debate was offered last Friday by the Taoiseach and it was refused.

But the decision was taken last Thursday.


The Minister to continue without interruption.


But the one man with additional information has not yet come into the debate. He has been kept to the end of it when the debate is closing.

So the Deputy wants not only to decide when we have a debate but also to decide the order of our speakers. Well, well, well.

Deputy Ryan should not interrupt, please.

I will not. I have made my point.

The Minister without interruption.

I was making the point that perhaps the only reason I could even remotely infer for the need to have a debate this week was to generate some additional noise or confusion or an apparent air of activity and involvement. As I tried to illustrate, it is all spurious and empty because a debate held today can have no immediate impact and can have no immediate relevance to any of the events associated with the EMS. Either it is too late in so far as last Monday is concerned or it is too early in so far as any of the events in the new year are concerned.

Before I leave this point I would like to note, too, that normally one expects to see the Opposition parties indulging in the luxury of selecting different viewpoints from which to attack the Government. Typically one would expect the Labour Party to attack from the left and the Fine Gael party to attack more from the right. Indeed some of the speakers from that side of the House, on the previous occasions when we debated this subject, have demonstrated this difference but I cannot resist the opportunity to note that while my constituency colleague Deputy Barry Desmond was making some snide remarks about me last week and it was not appropriate for me to reply to them then and I have no intention of replying to them now, in one respect he was well to the right of many people and was displaying a marvellously conservative attitude which was fully shared, so far as I can establish, by Deputy Peter Barry and one or two other Fine Gael speakers. The basic attitude of these speakers was that we should not be rushing into the EMS and risking a breaking of the link with sterling, that we had these well-established financial, monetary links with the UK and in effect we were safe in the arms of sterling. What a marvellous conservative attitude and one which I am sure well typifies the radical and dramatic approach of the Labour Party on issues such as this.

I would like to go on to deal with some of the confusion and I dealt with some of that when I was winding up last week's debate. I hope I successfully disposed of some of the confusion associated with Deputy FitzGerald's references. There was one matter which I did not deal with at the time because I did not have the opportunity and that was the question of the level of resource transfers and whether we were or were not talking about an EMS situation or an EMU situation. The Tánaiste did make this point at one stage and Deputy FitzGerald interrupted to say that he had not said that it was a de facto EMU but that it would be if we could not devalue. If I understood the Deputy correctly he was saying that if we go into the EMS and do not devalue or subsequently alter our exchange rate then we are, in effect, in a monetary union. That is as the Deputy was quoted.

It is not what I said or what I quoted myself as saying.

Dr. FitzGerald is quoted as saying that it was the equivalent of EMU if we could not devalue.

The Minister should read on.

I am quoting from the debate.

I said that either we go in with the intention of not devaluing, which is the equivalent of EMU, or with the intention of devaluing with all the consequences that flow from that. That was the alternative I put.

I should like to take the point, "no intention of devaluing". If we do not devalue, keep our exchange rate and maintain it and the EMS arrangements work Deputy FitzGerald seems to think that that is equivalent to a monetary union. It is not and there are a number of reasons why it would still not be a monetary union. I should like to take a simple example. We are told that for virtually a century the gold standard operated successfully for trading between the different countries, from the end of the Napoleonic Wars to the outbreak of the First World War, and that during that period countries had fixed exchange rates with one another but nobody suggested that the countries operating that gold standard ever formed part of a monetary union. There is an important powerful distinction between countries which operate fixed exchange rates with other countries and those which come together to form a monetary union. The EMS, in so far as it deals with a system of fixed exchange rates, is not and does not purport to be and never could be a monetary union. I hope we will not hear any more of that element of confusion or misrepresentation.

The reason I was anxious to refer to that matter was that in the context of talking about monetary union Deputy FitzGerald suggested that the order of transfers which we needed would be in the region of £600 million per year. It is because we are not talking about a monetary union that that level of transfer is not appropriate. However, it is relevant to one point I wish to make. If there are going to be statements or snide remarks from the Labour benches about people going around Europe with begging bowls looking for charity that sort of criticism ought to be directed where it belongs: at Deputy FitzGerald and the other Fine Gael speakers who are looking for £600 million. That is the sort of figure associated with saying: "We are poorer than the rest of Europe and if we are to enjoy something akin to the same standards of public services as the rest of the EEC, without improving our own output and performance, this is the kind of money you will have to give us". That is the begging bowl.

I was quoting what the Minister said in the MacDougall Report.

But the Deputy never quoted the context. I am illustrating the context in a simple manner because the context of that was a statement of the amounts that would be needed at that point if the countries concerned did nothing to improve their own living standards. The approach of the Government to this question has been: "Clearly, we are going to be moving towards some form of monetary and economic union over a period of years and if Ireland is provided with the right opportunities and conditions we will press ahead with a very rapid level of development during that period which will have the effect of, through our own efforts, improving our living standards and output and, consequently, our levels of public services. Therefore, we do not need, and hopefully will not need, handouts or a begging bowl on anything like the scale that would be implied by simply taking those 1975 figures and showing the gap between the rich and poor".

Essentially, that is the approach we have been adopting to this question of resource transfers, not going around with a begging bowl, not asking for anybody's charity but saying: "Yes, we recognise the importance of these developments for Europe; we want to participate successfully in those arrangements and to do that we must be sure of the arrangements to improve ourselves by our own efforts". In our judgement that called for the kind of financial support which would enable us to accelerate our investment, especially in selected areas of importance for our future progress such as some of the infrastructural areas, and underpin our employment and output in the short term.

The Minister deserves an Olympic medal for the speed of his conversion from his position as a member of the MacDougall Committee to his position as a member of the Government.

The Minister deserves to be heard without interruption.

The Deputy may choose his place and his weapons and we will debate this outside the House any time. Alternatively, he should get a debate going here and I will deal with it. I am making the point that all the Deputy's references to it were mistaken and wrongly applied. If they were to be taken literally, the Deputy is the person who is looking for the begging-bowl approach. I want to refute that approach totally and absolutely on behalf of the Government.

On this question of approaches to resource transfers, what we are looking for and what we got, I should like to mention a point which I did not deal with last week. Deputy Horgan tried to make the point that, if some of these transfers were coming from the Community budget, we would be helping to pay for them ourselves because we contribute to the EEC budget. We contribute to the EEC budget, but our contribution is less than 1 per cent, so that any transfer we succeed in getting from the EEC is more than 99 per cent paid for by the other member states. Technically, he has a point if he worried about the small amounts involved. They have the effect of rounding down the £45 million plus associated with the Community package to about £45 million. I hope we will not hear any more worries or concerns on that point.

Deputy Bruton made a statement that the Government had failed in the three tasks they set themselves. He said we were looking for a special division of the regional fund and had failed to achieve this. I should like to state that at no stage did the Government say that they needed or wanted resource transfers in any specific form. It is true that references were made to the regional fund as one possible vehicle but by no means a necessary vehicle or the only possible one. We knew what we wanted the money for. We knew how we proposed to use the money were it made available to us, but the actual mechanics or instruments by which these transfers would take place was something to which we had a perfectly flexible approach. It is not true to say that the Government had sought a special division of the regional fund and, therefore, it is demonstrably not true that we could have failed.

That Deputy also made the point that there was a failure to ensure that the loans available could be extended to industry as well as to agriculture. I hope that one has been successfully disposed of. I should like to repeat that part of the discussions that took place subsequent to the Brussels Summit were designed to clarify the arrangements of these loan facilities and the grants associated with them. We are satisfied that there will be sufficient flexibility in the operation of those loan arrangements. One part of that flexibility is that we are satisfied that they will not be confined exclusively to infrastructural spending. That alleged failure does not arise. The fact that it had not been clarified at Brussels does not mean that anything had or had not been resolved at that point. It was successfully resolved in the subsequent days.

The Fine Gael amendment asks us to deplore the Government's actions in relation to the EMS because of the need arising from this mismanagement for substantial external aid to enable our weakened economy to accept the constraints of membership of the European Monetary System. There are two points I want to make about paragraph (iii)—"the need arising from this mismanagement for substantial external aid". Going back to my earlier remarks about monetary unions and whether we should be looking for £600 million, if Deputy FitzGerald believes that, then we do not need substantial aid because of any mismanagement on our part. The MacDougall figures refer to 1975. It is true the Coalition Government were in office then, of which Deputy FitzGerald was a distinguished member. The only inference one can draw from the numbers that have been used so far is that Deputy FitzGerald wants a large amount of aid because he is still thinking of the weakened state of the economy which prevailed under their Government, whereas we have been able to seek small amounts because we are more confident about the increased strength of the economy since an adequate Government was restored.

The Minister is joking, of course.

The Minister is very funny.

The Deputy should know better than anyone else the extent of the damage that was done to our economy in earlier years——

Not to worry.

——and the extent of the aid that was needed to restore it.

The Minister is wrong.

I am making the point that, even by contrasting the different statements made by Deputy FitzGerald on this question of the EMS, we can agree there has to be something wrong with this part of the Fine Gael amendment, because either substantial aid was needed anyway, irrespective of our alleged mismanagement, or it was not. If he wants to make the case that additional aid is needed as a result of our mismanagement, I would be delighted to see the scale of that additional aid and the basis on which it is calculated. Meanwhile I suggest that that part of the amendment should be quietly put off.

Paragraph (ii) of the Fine Gael amendment reads:

the resultant rise in money incomes and consumption boom, concentrated mainly on imports, and the threatened incomes free-for-all in the months ahead...

I agree with Deputy FitzGerald that personal consumption has grown rapidly this year, but that was part of our policy. We were the first to say that that was one of the results that would follow this year from the turn around we envisaged taking place in our economic affairs. I cannot agree with him that there is anything unhealthy or unsustainable in this expansion. He points to the growth in consumption and imports. What are the figures? The growth in consumer spending in real terms this year was something of the order of 9 per cent, very large, very dramatic and well in excess of the normal increase in any year, even a good year. I would be the first to say that we cannot sustain increases of that order, and I have said that all along. What is the increase in investment this year? The increase in the volume of private investment this year appears to be 18 per cent, in other words, twice as fast as the growth in consumer spending. The overall growth in investment is somewhere in the region of 15 per cent.

That is not the characteristic of an economy that is enjoying a short temporary bubble of a consumer boom. That is the characteristic of an economy which is growing rapidly and where investment, the leading key to future ability to grow, is the much faster growing factor. If we can sustain that momentum in the investment area, far from being worried about what is happening we shall have cause for rejoicing that the foundations for this sustained faster pace of development are already showing at this early stage.

Imports are growing more rapidly this year. We were the first to say there would be an increase in imports this year and an increase in the balance of payments deficit, but, provided it did not exceed certain amounts, this was a perfectly sustainable growth and was in keeping with the other elements of our policy. What is the growth rate this year? As far as I can see, the import elasticity, that is the rate at which imports are growing with respect to total demand, is of the order of one and a half. That is very much in line with the average. In 1977 there was a faster growth, but this year there is a slower growth in the ratio of import growth to final demand. There is not a deterioration or a worrying pattern emerging on that front. If one looks at the components of import demand one will see that the growth in imports of investment goods, of capital equipment, is as rapid as, if not slightly more rapid than, the growth of consumer goods. There is no cause for concern on that front.

I would like to deal now with the resource transfers and the scale of them. Deputy Cluskey was repeating his confusion this morning when he tried to allege that there was no grant element associated with these arrangements, because there is. The arrangements for the interest subsidies and so on, as we have already established, take the form of cash transfers which become effective in the first year. We are talking here about cash transfers for 1979 which should be somewhere in the region of £70 million. That figure is of the order of 1 per cent of GNP. It is a figure therefore which will enable a significant stimulus to be given to the economy to cancel any deflationary effects that might arise.

One point I would like to take him up on. He mentioned the more prosperous member states supporting this transfer arrangement, especially the additional arrangements negotiated last week, and made the analogy with somebody who is always troubling you for a loan and you want to get him off your back quickly. That is a most insulting attitude for any Deputy to adopt to our partners in the European Community. It reflects very little credit on his party and on this House. I would like the opportunity of placing on the record our recognition of the extremely understanding approach adopted by our colleagues in the Community, the extremely generous manner in which they discussed our problems and the issues that will arise for us in the EMS context and the very generous manner in which they demonstrated their willingness to provide us with the opportunities to make a success of our participation in that system. We should record our thanks for that very generous and understanding approach.

I am not going to go over again the whole question of the amounts involved. Could I make this point for the purpose of comparison, since somebody seemed to think that £25 million a year was a mere bagatelle? The figure represents the equivalent of our receipts from the regional fund this year. If somebody had come back from Europe claiming to have negotiated a doubling of the regional fund, I would be amazed to hear anybody imply that was a mere bagatelle.

The regional fund continues year after year.

There will be a review clause built into this after two years.

The Minister has two minutes.

The extent to which we should expect other States to support and help us in our participation in the system should be contingent on our own performance. What we have been given is a two-year period to make the successful transition into membership. Let us now demonstrate by our own behaviour during that period that we have made the best use of the support given to us.

Before I conclude—I hope the Chair will give me a minute or two injury time—I want to comment on another point. The second part of the offsetting action needed to deal with the consequences of membership was the appropriate adjustment in our behaviour at home. There were references to apparently wanting to put all the burden of adjustment on to the workers. This is not so. All the statements coming from the Taoiseach and from Ministers have been emphasising the point that it is not realistic for people to expect that they could sustain increases in incomes next year of the order of magnitude which have taken place this year and perhaps last year. If our inflation rate is substantially lower we will then be talking about real income increases in the region of 10 per cent or more. That is not feasible. We have been saying that wage increases must be brought more into line with what is sustainable on the basis of the real growth in the economy. I want to emphasise that in the initial months the burden of adjustment will not fall on the vast majority of workers. If the burden of adjustment falls anywhere it will fall primarily on management and on the owners of firms because the pressure will come primarily on profits, not on wages. If anything, there will be a tendency for the real value of wages to rise faster than would otherwise be the case in the absence of the EMS.

The Minister should conclude.

The one area in which any burden could arise for workers is in some of the vulnerable industries. In that case the Government have already said that they will act quickly and appropriately to deal with any difficulties that may arise. There is no point in trying to spell out in advance of any particular problem arising the nature and the scale of the action that will be taken to solve that problem. I want to emphasise that the Government are willing to take appropriate action but it has to be recognised that they alone cannot solve any of those issues. It is a matter for the trade union movement, management, farmers, all sections of the community to come forward with the appropriate response so that we can enter this system with the minimum of disruption and gain the maximum advantage from our participation. I want the message to go out from the House, because I know from the empty Opposition benches that they are not particularly interested——


I am calling the next speaker.

I want the message to go out from this House that the Government are not asking the workers to accept an intolerable burden. We are asking them to join with us in a set of policies that will enable an even more rapid increase in employment to take place this year——

Sorry, Minister, I am calling the next speaker, Deputy Richie Ryan.

——so that we can claim that the EMS was a marvellous opportunity for our country.

It seems to me that the fact that the Minister insisted on staying on his feet after you had called me on several occasions is a clear indication of the complete charade which surrounds the suggestion that the Government have at all times been willing to have a full and frank debate in relation to the EMS. I am sorry for having interrupted the Minister while he was speaking and I accept your chastisement. I want to repeat the point I made at that stage that if the Government were even half sincere about having a meaningful debate the Minister for Finance, who was present last Monday at the meeting of Finance and Economic Ministers in Brussels, would have given us the information which the Taoiseach thought so important that he referred to it in his opening statement. He told us that the Minister for Finance would give us the information about decisions made last Monday.

We have had two contributions from the Government, the Taoiseach and the Minister for Economic Planning and Development, and they have not given us one word or one figure about decisions made at the meeting in Brussels last Monday. This is utterly intolerable. When, on top of that situation, there is no Minister apparently prepared to sit on the Government benches—the Minister for Economic Planning and Development was about to leave the Chamber until the Chair reminded him that the courtesies of the House required his presence—we see the utter futility of trying to have a worth-while debate on this matter.

The Deputy should not be accusing the Chair of anything.

I am crediting the Chair with reminding the Minister of the courtesies which need to be observed even though he has no intention of listening to anything which might be said here or anywhere else. He is so conceited about his own economic policies, which have brought this country to its lowest economic point now for more than a decade. I shall quickly establish this.

The value attached to a currency anywhere will not be dictated by any nice politely arranged, diplomatically orientated, formally arranged system of currency stability. It is dictated by the market, by what the world thinks of any particular country's economic performance. In relation to the Irish performance at the moment everything points to a devaluation of the Irish punt as a result of the policies pursued by the Fianna Fáil Government since they got back to power on an economic programme which the Taoiseach today described in his opening statement as ludicrous economics.


I draw the attention of the country to the fact that the Taoiseach today described their policies as ludicrous economics. He said that any policy which led to inequities, any policy which built up domestic inflation, any policy which resulted from yielding to pressures was ludicrous economics. All those attributes are the attributes of the economic policies of Fianna Fáil and of the Minister for Economic Planning and Development, in particular, who likes to be credited with the growth rate of this year but is not prepared to face the consequences of his ludicrous economics in the years which are immediately ahead.

The Taoiseach is an expert at offering himself as a person whose personal innocence is often affronted. Today he charged the Opposition, certainly Fine Gael, with being in some doubt about whether or not we should join the EMS. The Taoiseach is too snide by half. When somebody is holding himself forth as Simon pure he ought at least to play fair. On no occasion have the Fine Gael Party, either since the Bremen Conference or before it, argued that Ireland should not be a member of any system which would produce stability in currencies and in trading arrangements within Europe. It is quite the reverse. The Fine Gael Party, not merely on this occasion but throughout the years, have been at the forefront of all movements to have Ireland adhere to systems of international monetary stability. In the twenties we had the Bank of International Settlements. We endeavoured to join it but for technical reasons Ireland was not qualified. During 17 years of Fianna Fáil Government no effort was made to join the Bank of International Settlements. We endeavoured to join it but because at that stage we did not have a Central Bank we were not qualified to join it. In the early thirties we established an arrangement which would have made it possible for us to join it but Fianna Fáil decided not to join it. Later, when the International Monetary Fund was set up, as a result of the Bretton Woods Agreement, Fianna Fáil made no effort to join it. It was not until Fine Gael were in Government that Ireland joined both the BIS and the IMF. Why is there this scramble now by Fianna Fáil to join the EMS? I agree that it is right to join but why are Fianna Fáil behaving in a way that is contrary to all their previous activities in the field of international monetary stability? The reason is that they want to blame the EMS for the political and economic decisions that must be taken in Ireland in the near future in order to correct the mistakes of the past 18 months. What we must make clear is that the EMS will have virtually nothing to do with the unpopular measures that the Government must take soon to correct what the Taoiseach referred to as the ludicrous economics of the past 18 months. But the Government want an alibi and bureaucrats in Brussels are convenient whipping boys for this purpose.

We have witnessed many countries during the past five or ten years using the IMF as the whipping boy for their economic lunacy. On many occasions when various nation states were in serious financial stress they looked to the IMF and blamed it for the inevitable economic steps that had to be taken. Fianna Fáil's ambition now is to put all the blame on the EMS for the corrective procedures that are essential. That is the essence of their approach to the EMS. It is not, as the Taoiseach pretends, a question of accepting the challenge that is open to us now in order to improve the Irish economy. The day that Deputy Jack Lynch, Leader of Fianna Fáil, puts national interest above party interest, will be a day on which the sun will fall from the heavens. In this respect I shall quote the former Deputy Frank Carter who, shortly after the last general election, indicated that Deputy Jack Lynch's leadership was always to follow the backroom boys who studied the market and knew the way to popularity. It is Fianna Fáil's objective to try to avoid the unpopularity that will follow from decisions they have to take. Consequently, they rush into the arms of the EMS so that they can blame the EMS for the corrective economic measures that must be taken.

The Minister for Economic Planning and Development suggested that the Opposition sought this debate because of a desire to create more confusion. But could the situation be any more confused? We have had innumerable contradictory statements from various Ministers. Even when there was agreement among them their statements were in conflict with statements that emanated ultimately from the Brussels meeting of the European Council. The Taoiseach's speech this morning was interesting in that he made a number of admissions of failure on his part and on the part of the Government generally. He also made a number of admissions which indicated that Fianna Fáil's criticism of our Government were, to say the least, unfair. For instance, the Taoiseach said that a 15 per cent oil price rise shows how fragile is the economic balance of recent years. While in Opposition Fianna Fáil did not concede once that a quadrupling or a quintupling of oil prices had any bearing on this country's economic balance. Now that there is a tiny 15 per cent increase they are suggesting that this is an indication of how fragile is our economic balance. I do not disagree with the argument but it shows the utter insincerity of the Taoiseach and his friends when they pretend that their hearts bleed only for Ireland, that they never bleed for Fianna Fáil.

Talking about pay and incomes the Taoiseach said it was clear that a repetition of the events of 1978 must be avoided. To that extent the Taoiseach is condemning the Government policy which led to a situation of a 17 per cent increase in incomes. This was about 8 per cent greater than the increase in productivity. What is utterly contemptible is his effort to put the blame on the trade unions, on the workers. Let us be honest and sincere and leave party politics out of this. Is there anyone of reasonable intelligence who has any doubt but that the unreasonableness of the demands being made now stem from the Fianna Fáil election manifesto? There is no other source that can be blamed for the increase in expectations that have developed in the past 18 months.

I do not accept for one moment that, as Fianna Fáil propaganda urges us to accept, the trade unions are irresponsible. Of course there are irresponsible trade unionists as there are irresponsible people in all walks of life, including politics. In this House most of the irresponsible politicians are on the other side. However, when, as a result of international developments, this country was experiencing immense difficulties in the years 1974 to 1976, the trade unions behaved very responsibly and I wish to put on record my appreciation of their readiness to be responsible. That applies not only to trade union leaders but to all our people because they understood the realities of life and did not run away from them. All the efforts we made while in Government to bring home to people the economic realities not only in the middle of a recession but at all times were damaged considerably by Fianna Fáil's election manifesto in which it was suggested that there was no need for the controls we were talking about, that there was no difficulty and no limit to resources and that if Fianna Fáil were returned there would be manna from heaven. But that has not happened and now when we are at the end of what might be called the holiday Fianna Fáil are saying: "Boys and girls and little children, you will have to pay now for the fun".

I recall seeing the then Deputy George Colley on television in midsummer, 1977. Having been well tutored by the media boys, the actors and so on, he asked us to contemplate on how an aeroplane takes into the air. He said the engine must be revved up, that that requires extra fuel, that then the plane must rush down the runway and take off. He then went on to say that that is what Fianna Fáil wish to do with the Irish economy. I accept that they put the plane into the air but it is descending now like a burst balloon—and nobody is certain of where it will fall and who will be hurt. The EMS has been rushed to in the hope that for a short time it will provide a little hot air to keep the Fianna Fáil economic aeroplane from crashing to the ground. That is the reality of the Fianna Fáil policy and of their political approach to the present situation.

The Taoiseach said also that inflation is a form of taxation which, if continued, can divert an ever-increasing proportion of the nation's resources from the people to the public purse. I do not know why he builds in the conditions. Fianna Fáil have generated inflation this year in many fields and particularly in relation to housing. The price of housing has increased by 30 per cent, more than three times higher than the national rate of inflation, as a result of the Fianna Fáil housing policy. That is going to divert, in the Taoiseach's own words, "an ever increasing proportion of the nation's resources away from the people".

As I said earlier, all the indices which are used to determine the value of a currency are pointing to negative as far as Ireland is concerned. Unfortunately I was interrupted at the time I was about to talk about this by the Minister for Economic Planning and Development as he decided to leave the House because he could not bear to hear the truth. I should like to give the three main reasons why currencies are devalued. First, because the rate of domestic inflation is higher than the rate of inflation in that country's trading partners. That is the position as far as Ireland is concerned at present and it will get worse in 1979. Secondly, a currency is devalued by international markets if the rate of Government borrowing is at an unacceptable level. Where, as in Ireland's case, 13 per cent GNP is being borrowed to finance public expenditure, international markets will say that that figure is too high. They will say that particularly when, as in Ireland's case, more than 50 per cent of publicly borrowed money in 1977 is devoted to current expenditure. At the time of the budget the indications were that about 49 per cent of Government borrowing this year would be on the current side. The present indications are that between 55 and 56 per cent of Government borrowed money in 1978 will be on the current side.

I have nothing but contempt for the audacity of Ministers and their supporters who claim credit for having the highest growth rate in Europe in 1978. If you spend a lot of money, you cannot but produce a figure of growth rate which looks impressive but the cost of producing an impressive figure in any year is the burden of debts you have to carry in future years, if your growth is as a result of borrowing. This country has some very difficult years ahead of it and it will not be because of membership of the EMS. It will be because of the crazy economic policies followed by the Government over the past 18 months, policies which the Taoiseach correctly described today as ludicrous economics.

We seek information, not for the first time, on how the Government propose to help firms who may be in short-term difficulties in the years ahead. The Taoiseach was boastful today about the number of times this matter has been debated in the House. One would think that, at this stage, we would have received from the Leader of the Government some indication as to when and how the Government would help firms who might experience short-term difficulties as a result of fluctuations in our currency against the currencies of our trading partners. Yet, all we have is a deafening silence.

The Taoiseach was very critical of the Opposition's contribution to the EMS debate. I should like to draw attention to the fact that one of the areas of significant influence in relation to the European Monetary System is the European Parliament. Twice within the last eight weeks there have been major debates in the European Parliament about Ireland's participation in the EMS. There was no representative of the Government party involved in either of these debates. The case for special assistance for Ireland and the argument in favour of Ireland's membership of the EMS had to be advanced by members of the Fine Gael Party whom the Taoiseach today dismissed with a contemptuous remark. We seek no glory for this; we did our duty. However, it is insufferable to have a Taoiseach who holds himself forth so often as a Simon pure and goody-goody coming into this House and being critical of those who have, far beyond the call of duty, argued the case for additional assistance, and for special treatment for Ireland, while the Fianna Fáil Government were still dithering over the matter. The Taoiseach said that the fact that our case was not acceptable at the Brussels Council "has nothing to do with the quality or force of the arguments advanced by us". He also said: "There was never a European Council so thoroughly prepared" as the European Council which brought about an arrangement which he could not accept.

We are critical of the handling of the negotiations and rightly so. Yesterday there was a declaration from the Prime Minister of Luxembourg, M. Gaston Thorn, who said that, at the time of the Brussels Council, he did not understand the Irish situation because it had not been explained to him. Luxembourg is the smallest member of the EEC. We are the next, in fact, in inferiority, for want of a better word. The vote of Luxembourg is as powerful as the vote of Germany at meetings of the European Council of Ministers. Here is a situation in which the Prime Minister of Luxembourg states that when he went to the European Council, and even during the meetings of the Council, he did not understand, because he had not been given the information, that Ireland was a special case. When it was explained to him, after the Brussels meeting, he arranged that little Luxembourg would make a very significant financial contribution to the additional contribution which is being made to Ireland. Yet, the Taoiseach has the audacity to criticise us for criticising him and his incompetent Ministers for the inadequacy of the consultations and the inadequacy of their diplomacy. Out of the mouths of babes and sucklings, out of the mouths of Prime Ministers of small states, the truth is sometimes revealed. The remark by Gaston Thorn yesterday was very revealing because it showed just how incomplete and unsophisticated were the negotiations conducted by the Government.

It is a good thing for Ireland that economic knowledge has increased over the last 20 years. When I entered the House about two decades ago the amount of economic debate was negligible. However, the growth in economic information has not necessarily increased economic wisdom. There have been, in recent times, a great number of people with little understanding and less knowledge offering expert advice about matters including currency matters. It is quite noticeable how often they use jargon to conceal their own confusion or to confuse their readers or listeners. One of the worst contributors to this discussion was the Taoiseach this morning. I am sorry I was not here earlier to hear him deliver all of his address but I have had the opportunity of reading it all and I heard about three-quarters of it. I would give him an E mark for the amount of economic wisdom it contained and for the relevance of many of his remarks in relation to our present economic situation and our participation in the EMS. As I said earlier, what was deplorable was the fact that he had information about last Monday's meeting of Finance Ministers in Brussels but he did not impart it at the outset of this debate. We will get it only in the closing hours of the debate from the Tánaiste. That is not a genuine effort by the Taoiseach to have a worthwhile meaningful debate which he often boasts he is giving to us in relation to this and other matters.

What is the difference between what the Taoiseach rejected at the Brussels Summit and now? When people speak in millions, it tends to conceal the reality. We are told we are to get, as a result of the feverish week of negotiations after the European Council, an additional £50 million spread over two years. In real terms, that means for every man, woman and child in the State, 16p per week or a little less than 2½p a day. On the basis of that, we are told that the situation has changed so radically that what was not possible in Brussels became possible a week or fortnight later. I accept that it is not always possible to give the fallest details, in the course of negotiations, to a parliament or to anybody else. But we ought be given a little more information than we have yet obtained from the Taoiseach.

In Luxembourg the week before last I heard on the Tuesday, before the formal announcement in Dáil Eireann, that there was now no doubt that Ireland was going to join the European Monetary System. We were informed that very generous terms had now been offered to Ireland which involved private banks as well as governments. This, to say the least, is unusual. Most international arrangements, such as that in which we are now involved in the European Monetary System, mean that financial assistance—because that is what we are getting in the additional package—is given by governments. But we are now in the weird situation that apparently negotiations are still continuing between a number of sovereign governments in Europe and private banks to give financial aid to Ireland to enable us face the consequences of full membership of the European Monetary System.

The Minister for Economic Planning and Development was highly critical of us for pressing for this debate before 1 January. We pressed for it in the hope that we would get some real, worthwhile information about these negotiations. I have learned no more today from the Taoiseach's statement, or from the statement of the Minister for Economic Planning and Development, than I heard in Luxembourg in the corridors of the European Parliament ten days ago. That is not good enough. If the Taoiseach was not in a position to give any more information today then he should have argued for a postponement of this debate until the information was available. I accept that he did but, nevertheless, he gave in and informed us this morning that apparently some worthwhile information will be made available but, when? At the end of this debate?

There are many other things I should like to pursue but the time available does not allow me to do so. I am sure the business world will be pursuing the many gaps left by the Government's statement and by the various edicts that have since emanated from the Central Bank. I want to make this plea: for goodness sake, end as soon as possible, all the uncertainty. The objective behind the European Monetary System is to end speculation and uncertainty, to produce stability. All we have had since the Bremen Conference is a greater degree of instability within Europe in currency matters than we experienced even during the height of the oil crisis. Because of our old relationship with sterling, obviously there are additional strains and pressures in relation to Ireland than apply to other countries. But, for goodness sake, end all of these uncertainties and instabilities as quickly as possible so that people can settle down and make businesslike arrangements as a result.

In Fine Gael we have always argued that we should develop ourselves economically so that we rid ourselves of the domination of the Irish economy by Britain. We achieved our political independence many decades ago but we have not yet achieved our economic independence. The European Monetary System affords us an opportunity to achieve more economic independence than we have had previously. Even when we did not want to, we imported the consequences of many situations which were relevant to Britain but were not appropriate to Ireland, such as credit squeezes, high interest rates and so on.

We accepted that price because, being a member of the sterling area, we avoided some of the speculation which otherwise might have applied to our currency. Therefore we had, for good or ill, the advantage of being in the lee, as it were, of sterling. It is right to get out of the lee of sterling but we need the lee of the European Monetary System. That is what we are opting for. Indeed, the Government are right in so doing. It is a pity the negotiations were not better when, in the process of change, we could have achieved more economic and financial advantage. But broadly the decision is right. The regret is that the negotiations were not more competent, when we could have had even greater benefit than that which will now flow.

Let us remember that in this country we are going to face unpopular economic policies to correct the mistakes of the last 18 months. Those steps will have nothing whatsoever to do with the European Monetary System. After all, the European Monetary System is essentially no more nor less than the International Monetary Fund of which we have been members for nearly 18 or 19 years. The disciplines and margins are much the same. The only difference, as I see it now, is that the Fianna Fáil Government are jumping with joy, grabbing at the European Monetary System in order to blame the European Monetary System for the unpopular policies which will have to be pursued anyway. We will face that whenever those political arguments develop. I believe there has been a lot more talk and argument about the European Monetary System than it deserves. It is not the most significant economic force at work in this country, and will not be, for many years to come. If any country gets into difficulties under the European Monetary System the other members of the system will move to assist that country. Therefore, we do not have to become the strict disciplinarians the Taoiseach says we must become to remain within the European Monetary System. But, unfortunately, the country will be subjected to a number of very harsh economic measures to correct the economic follies of the Fianna Fáil Party since their return to power.

I wish to support the decision of the Government to participate——

On a point of order, Sir, might I have any indication from the Chair—I know possibly it is not fair to ask the present occupant who is only filling in—what is the order for the day because it seems to be from Billy to Jack, from Fianna Fáil to Fine Gael?

The first of the final three speakers will be called at 2.45 p.m., as the Deputy knows.

I am not interested in that. I am interested in what goes in between.

Acting Chairman

I cannot say exactly what the occupant of the Chair will do at that time.

I support the decision of the Government to participate in the European Monetary System. I see in this an opportunity to improve the prospects for economic development in Ireland and to achieve, as the Taoiseach has said, greater stability in prices.

I was very interested to hear Deputy Ryan's comments at the end of his speech when he came out very clearly in favour of our joining the European Monetary System. I take it he came out fairly clearly in favour of our joining at this time. Up to now—having listened to earlier speakers—I wondered were the Opposition for or against the European Monetary System; were they playing word games? They seemed to be going round in circles, not coming out with any clear decision for or against. I believe the people would like to know whether the Opposition are for or against our joining the European Monetary System at this time. I appreciate the Opposition must make what points they can in relation to the negotiations, terms and whatever other issues are involved. I believe they should put it clearly on the record now—and I would hope they would do so in their reply—that at this time the Opposition are prepared to support the Government, go with the whole country into the European Monetary System, and let us make the best job of it that we can. I say "now" because I realise that Deputies P. Barry and Cluskey also agreed in principle with our joining the European Monetary System. In this country there are far too many people who agree with things in principle, who are not prepared to come and nail their colours to the mast here and now. That is why I was particularly glad to hear Deputy Richie Ryan make his contribution at this point. I take it from what he said that he is in favour of our joining now.

I listened to the debate at length this morning—with the exception of the time I was absent having a cup of tea—and I heard no such clear view emanate from the Opposition side of the House. I look forward to hearing the final speeches.

The Fine Gael amendment deals with the management of the economy and the question of income restraint. The first point in the amendment is that it is unwise, extravagant and anti-social to continue to manage the nation's finances at such an excessive level of current deficit and borrowing. There is also mention of the resultant rise in money incomes and the consumption boom, coming at a time when incomes restraint is essential. There is reference also to the threatened incomes free-for-all in the months ahead. I deplore the last statement because it is almost as if there were a desire to have such a free-for-all at a time when income restraint is essential. The last point in the amendment criticises the Government for the excessively severe measures taken with reference to the financial transactions between this State on the one hand and Northern Ireland and Great Britain on the other. Any reasonable person would realise that the Government had to take action, particularly in the short term, to ensure stability of currency exchange between this country and Great Britain. This is obviously a necessary measure in the short term and one to which we will become quite accustomed after a short period.

The Taoiseach's approach throughout the debates on this subject has been logical and consistent. It has also been clear cut and decisive. He has made it quite clear that he is in favour of the EEC and he is not raising questions about that central issue. He has accepted that there are problems in our membership of the EEC. Deputy Cluskey has said he hopes when the European elections take place that people will remember it was his party who suggested there would be problems in the EEC. Everyone recognised there would be problems but it is necessary to decide clearly and unequivocally whether we are in the EEC.

The Taoiseach has also come out in favour of closer integration of the Community. I welcome this. There are aspects of the Taoiseach's speech in this regard which I welcome as going on the record as the Taoiseach's view. The third point the Taoiseach makes is that he is against the two-speed approach to the EEC. He is against the situation in which the wealth of the central six member states is growing at over twice the rate of the peripheral three members. He is against the situation in which the currency stability and efficiency of these central member states is increasingly attracting investment to central Europe. If we want to reach the standards of living of the central EEC countries, we must become members of the EMS and adopt the disciplines involved in that membership.

One must recognise that there is a tide in the affairs of nations which, taken at the flood, leads on to greater things. When the question of the EEC was debated we were prepared to accept that there was such a tide and to take our place. I believe such a tide is possible also within the EMS if we give ourselves the clear-cut objective of rising to the standards and disciplines necessary there.

In this connection the Taoiseach, with the full support of the Government, has given the decisive leadership which was necessary. We have seen from the newspapers that the Opposition, both in the House and outside, and union leaders and business people have questioned in various ways our decision to join the EMS. Surely businessmen in particular can appreciate the need for decisive action on the part of the Government. It surprises me when I hear of businessmen in such trepidation about the decisive action of the Government because they are the very people who frequently take speedy and decisive action and work hard to see that their decisions are followed through with practical benefit.

Surely union leaders want higher standards of living for their members and increased investment leading to the creation of employment for school leavers and others who will be seeking jobs in the future. It has been made very clear that our membership of the EMS will provide direct benefits for long-term investment. We know that half the new jobs created here are the result of investment by US companies. Monetary stability and lower inflation rates will lead to acceleration of investment from the US and other countries such as Japan and Germany, who are showing an increasing interest in Ireland. There are direct benefits to be gained by providing monetary stability and the lower inflation rates associated with the EMS.

In many instances home industries also stand to gain from membership of the EMS. Those who export exclusively to the British market must be most sensitive in regard to any changes which take place between our two countries. It will be important for these companies to ensure that their policies and efficiency are not unduly influenced by any of the possible devaluations which may take place. Subsidiaries of British companies here may find it more stable to invest here, unless Britain joins the EMS.

Irish industry will be able to import materials and machinery with greater stability and certainty from our EEC partners. This has been one of the difficulties of currency exchange instability in the past. When we purchased large-scale capital machinery from the Continent we could in time find ourselves having to pay over one and a half times the price of this machinery because of the currency fluctuations in the interim. It must be a major benefit to industry to be able to rely on exchange rates in that respect.

I see our decision to join the EMS as one of the major economic decisions of our time. The First Programme for Economic Expansion in 1959 was a major step. I was conscious of it because I was a university leaver in 1958 and I was conscious of the number emigrating and the difficulty of obtaining employment. That programme was a milestone for our people. I have no doubt that our participating in the Free Trade Agreement in 1964 was another major milestone which presented considerable difficulties for our industry which, up to that time, had been highly protected. The vast majority of industries rose to meet that competition, improved their productivity and capital investment and not only survived but subsequently prospered. We have in the past faced major decisions and problems.

Then at the beginning of 1973 we decided to enter the EEC. This was an even greater and more difficult decision for all of us and particularly for industry. It represented the achievement of a goal for agriculture and an opportunity of a very high order for agricultural producers. This has been clearly evidenced by developments in agriculture since that date. It offered opportunity for our industry but it also offered challenge and competition. Our industry rose to that challenge and competition. It succeeded in expanding and developing and in the five years since our accession to the EEC there has been a switch in our exports of 20 per cent from Britain towards our other EEC partners. This was a major development and represented a very considerable diversification in relation to our overall policies.

We come now to another milestone, namely, our decision to join the EMS. I should like us to go from this House to-day with the clear decision and conviction that whatever views we may have had about the details we are totally in favour of joining the EMS now. Entry to the system would not have been so feasible in the past. It must be seen in the context of the development of our agriculture and industry and our total accession to the EEC. Timing in this matter is particularly important and the time is right now. I congratulate the Minister and his team on their decision.

Of course there have been criticisms of the negotiations. There was nothing simple about our decision to go into the EMS. It was a complex situation with many facets and political, industrial and agricultural factors had to be taken into account. Possibly it was one of the most complex decisions that we have taken in recent years. The partners at the summit meeting had their own domestic problems and the Taoiseach had to face that fact in his discussions with them. In the event, the domestic problems of member states had a major influence on the drift of the discussions and negotiations.

During all this time Ireland's negotiators were honourable and forthright. There has not been a word from any source outside this House to say otherwise. We put our cards on the table and we said what be believed was necessary. The Taoiseach has insisted repeatedly throughout the debate that there was extensive and continuous goodwill for our approach and position within the EMS. This has been denied. It has been suggested in this House that goodwill is all very well but money is what we are talking about. Since the summit the six member states—Germany, Denmark, France, Holland, Belgium and Luxembourg—have come together to demonstrate positively and clearly what they meant by goodwill. Not only were they prepared to give statements to this effect but they were prepared to supplement the package that was provided for Ireland. As a result of further loans, we will receive in grant form an additional £50 million in the first few years giving us a total of £70 million in the first year, £70 million in the second, and £45 million in the third, fourth and fifth years. This must substantiate what the Taoiseach has said throughout, that there was goodwill for Ireland and for our position.

As Deputy Ryan said, a considerable amount of heat was generated in this House and I am quite sure this happened in other parliaments throughout Europe and in the corridors of those parliaments in relation to all aspects of the decision to join the EMS. I am not going to discuss the position adopted by Britain, Italy, France or any other member. That is a long debate that could occupy quite an amount of time. Throughout all the debate and heat it was quite clear that the Taoiseach remained cool in negotiating under fire. In situations where people were faced with domestic weakness and differences from various quarters, he remained cool under pressure and ultimately came out with what he and his economic advisers considered a worthwhile £275 million package for Ireland at the time of our accession to the EMS.

The question of parity between the £ sterling and the punt has been raised. Deputy Barry asked the Taoiseach why we did not choose the wider band. He said that the United Kingdom have said that they will keep their relationship only with the central rate and that Britain may break with the punt. He stressed also that there would be fears for industry if this should happen. This aspect has been raised throughout the debates. Deputy Ryan said that currently everything points to a devaluation of the punt. I do not think that is likely at this time.

Recently I attended a meeting that has been mentioned in the press. It was at Downing Street and there were other Irish and European members present, including Deputy FitzGerald and Senator Whitaker. At that meeting Mr. Denis Healey, Chancellor of the Exchequer, said publicly to the members present from the different countries that as long as he was Chancellor there would be no divergence between sterling and the punt. He gave us his personal and unequivocal assurance that the two currencies would not diverge. So far as the Chancellor of the British Exchequer is concerned, Britain has no intention of diverging from the punt, most likely because of the closeness of our economies and the amount of our trade which is interdependent.

Of course the most essential element is the question of our productivity. The purchasing power of the punt within the EMS now depends on our own productivity. We want real income increases as a result of real productivity improvements. It is now up to management and unions to plan constructively for growth and productivity. In the forthcoming tripartite talks between management, unions and the Government about the future development of our economy, about social affairs, wages and so on, these three great partners within the social structure will sit round the table to discuss what will happen in the future. No longer will they have to look across the water to see what value the punt will have. These leaders will now be discussing and managing our punt within the EMS. This is a vital difference and represents a tremendous change. In future when we talk about our wages and our standard of living we will see clearly that we are discussing our own currency. The extent to which we were dependent on Britain in regard to currency changes was a weakness which obviously must have had considerable influence on such discussions and negotiations, because the Government could not guarantee currency stability because of an external factor.

On joining the EMS we will be working within a very close monetary structure which will allow us to recognise the fact that the responsibility will rest with us. We cannot shirk it or pass it on to somebody else. We can no longer say that it is because of British trade unions, British management or any other external factor. I like that sort of situation, where responsibility can be allocated and seen clearly. Young people will be able to see clearly where to lay the blame in relation to decisions that are made in the future. I have every confidence that those who will sit around the table in the circumstances of our membership of the EMS will recognise their responsibility and will act with responsibility. I appeal to responsible trade unionists and business people to join with the Government in achieving greater economic development and higher standards of living within the structure of the EMS.

I have great pleasure in supporting the Government motion in the name of the Taoiseach and I congratulate the Taoiseach on his negotiations in this very difficult situation.

I will raise a number of matters the Taoiseach mentioned in his introductory speech. The Taoiseach emphasised that this is a major decision, and no one can doubt the truth of that. The Taoiseach also chided the Opposition, particularly Fine Gael, about whether they do or do not support our entry into the EMS. We are doing right in joining, but I am not sure whether we have joined it in the right way because of the provisions that will be required in order to eliminate the dangers inherent in EMS. The various short debates and statements that we have had do not clarify the matter to any great degree. The answer to the question whether we should have waited for the UK to make up their minds must be an emphatic "No", because had we waited we would be in isolation and we would have had no basis for negotiating special treatment for our circumstances or difficulties. I have no doubt that the UK will go in but they cannot and will not make that decision for the obvious political reason of the impending general election. We can take it that in negotiating the various details of our entry the Government will take into account that Britain will join in the not too distant future.

Some of the Government speakers should clarify in the not too distant future the situation that will obtain when Britain are in. As I understand it, whether we go in together or not, things will never be the same again in so far as our ties with Britain and the link with sterling or our parity with her currency is concerned. This is not clearly understood outside. If I am wrong in my assumption, it shows how unclear I am on this matter. Whether Britain goes in or not, as I understand it, it will not make any difference to the fact that we are breaking the link with sterling after a century and a half. When and if Britain goes in that will not restore the situation in regard to the day to day operations between the two countries in trade and commerce. It will not bring back the freedom we had in relation to cross-Border trading, where we could ignore the Border so far as value of money and general trading was concerned apart from customs regulations and controls.

Another matter I am not clear on is this: are we in the 2½ per cent band or the 6 per cent band? I have seen criticisms of statements alleging that we are in the 2½ per cent band and from reading the papers I understand that we are in that band. Yet I have been told by several people in the House today, although not publicly in speeches, that no decision has been announced formally by the Government as to whether we are in the 6 per cent band of fluctuation or in the 2½ per cent band. From an overall point of view it is important to know in which of these two bands we are, not that it makes all that much difference to the day to day operations of the people I represent.

I appreciate the Taoiseach's concern as expressed in his statement this morning where he intimated his expectations and beliefs but made no promise or arrangement. The Taoiseach says in his speech:

It may, I believe be expected that most traders in those areas and many others also will continue to accept the currency of the other area for normal trade purposes; despite some possible inconveniences.

This is something I raised a week ago during the EMS debates. While the belief expressed by the Taoiseach and his expectations are to be welcomed, both the beliefs and the expectations are far from reassuring to the people operating along the Border. There is no indication that there has been any arrangement to allow normal trading across the Border to continue without the application of the controls. I am looking at this in a much more strict light than the Taoiseach has indicated he expects it to operate. When the Minister is replying on behalf of the Government will he indicate whether they have yet worked out how, for instance, exchanges of money will take place on the Border? Will there be any special provision or any special accommodation provided outside of normal banking hours, which hours would be very restrictive if these were the only times people on both sides of the Border could get their currency exchanged? The Government indicated that all banking accounts must be transferred back into the Twenty-six Counties by Twenty-six County residents within a matter of three months under pain of prosecution and conviction. Are the Government fully aware of what they are now dealing with? They are dealing with a situation which has grown up over the years whereby, for instance, in North Donegal a great deal of bank accounts would by tradition down through the years have operated in Derry.

That is a situation which now apparently must stop. Have the Government taken this fully into account? It is not just a matter of having a bank account in a foreign country; it is a matter of having a bank account in one's own country, having had the tradition of having that bank account in one of the towns or branches of a bank in the Six Counties reaching back before there was any Border created. While it may not be the same people who are operating them now in a family way or in a traditional way, be it a private account or a business account, this is a fact of life in so far as Border residents are concerned particularly in a county such as Donegal where a great deal of its trading and a great deal of its business and commerce were centred on what would then be regarded as the capital of the North, namely, Derry city. That is not to say that there is not the same thing on a similar scale in Strabane and across into Enniskillen and Newry and so forth. This is a problem above and beyond any of the problems which the Government have touched upon in any of their statements. I hope that its lack of mention does not indicate a lack of knowledge of the situation and of the very severe problems that it is creating. It has caused great unease in recent weeks in regard to what is going to happen in the future. These are things that I would like the speaker for the Government to clarify. If that is not possible today in the time available an opportunity should be taken at the earliest possible moment to deal in much more detail with the situation in the Border areas than has been done so far in any of the speeches made.

I will move on quickly to the matter of the transfer of resources. We are told that there are now a total of £275 million, which some speakers have stated almost categorically are grant transfers. Would the Minister clarify just what this is? As to the £50 million that has been arranged by various bilateral agreements between some of the member countries and our own country, that seems to be in a special category by itself. Or is it to be regarded in the same light as the £45 million that we have heard about? In regard to the £50 million and the £45 million a year that have been talked about, are these grants? I will put it another way. If we do not borrow one penny of the £1,000 million that has been provided, or for which accommodation has been made, how much of the £275 million would we get? Is any or all of the £275 million that is said to be coming to us by way of a transfer of resources dependent upon and tied to the taking up of part or all of the loan facilities contained within the £1,000 million which is now the ceiling over the next five years that has been agreed in the negotiations in Brussels? That is something we should know. Certainly our knowledge of that could put a very different light on this matter of what we are getting in regard to a transfer of resources. As I said the last day, it seems to me that if we are borrowing money from abroad and getting it at 1 per cent and the other 9 per cent or 10 per cent could be regarded as an abatement or as a subsidy but being liquidated with only 1 per cent charged, then we would have to borrow in order to benefit from that 9 per cent subsidy or abatement. In the last analysis when we came to pay back the money we have borrowed, even at the 1 per cent, we would have to pay back that money in full plus the 1 per cent interest to the country of origin and when that account was closed the transfer of resources would have been out of this country and not into it. Therefore I challenge this statement that there will be a transfer of resources to us unless that £275 million over the next five years is a grant with no tags attached, with no commitment to borrow in order to benefit notionally—and notionally I deliberately say—to the tune of the £275 million.

We are abandoning what was regarded as a prudent and reasonable course by the Government of confining borrowing to 13 per cent of our gross national product and attempting to bring that back to 10 per cent, of our gross national product. There was an edict issued by the EEC during the year telling us that we must do what the Government were already committed to do in their own belief that it was prudent and necessary, that is, to reduce our borrowing from 13 per cent to 10 per cent. If that has not gone by the board where then is the sense of having accommodation immediately and over the next five years of an additional £1,000 million for borrowing? If our ceiling of borrowing is already too high and must be reduced, where is the capacity within that lower ceiling to borrowing that is now being made available to us as to £1,000 million or indeed any part of it? It seems to be contradictory. Either the edict and the decision to reduce borrowing from 13 per cent of our gross national product to 10 per cent has had to go by the board or the facility of the £1,000 million that is talked about is a complete misnomer; it is there and we cannot take it. Or is it that we are going to take it and displace the money that has already been invested? If we do this to what avail will it be? If we substitute the EEC loans that are now being talked about as being available to us in order to pay off the borrowers or the investors that we have at the moment, will we not largely be paying off our own home investors while taking on the commitment of foreign investment instead?

Deputy Blaney has five minutes.

I assure the House I will not waste it. I again ask the Government spokesman to clarify this situation because undoubtedly the contradiction stands there unless something has changed in recent months of which we have been told nothing. I would also ask the Government to spell out a little more clearly the point I raised the last day and to which the Taoiseach made some reference to-day when he said, in broad terms, that the Government will help positively if short-term difficulties arise as a result of our joining the EMS. That assurance was in reference to employment and to industries. Will the Government detail the positive help they are going to give? Are they going to have an assessment of the industries that may be endangered to see where the shoe is pinching, as it were, as a result of our joining the EMS? Will they be able to evaluate the type of financial help required by way of injection into such endangered industries to enable them to survive with a hope of continuing in business not only for their worth in production but, more important, for their worth in so far as much needed employment is concerned?

It was also stated today that no restrictions in day-to-day exchange and acceptance of currency will operate as far as the Six-Counties and the Border are concerned. I cannot see how this is capable of being reconciled with the rather drastic, though, perhaps, necessary, currency controls we have been reading about in newspaper advertisements. The opportunity should be taken this evening of giving the House a clearer insight into what is meant in regard to this special statement on the Border situation as against the general restrictions and controls that undoubtedly will be placed in our way in future. It is said also that the British do not intend to introduce controls in the foreseeable future. This is a rather doubtful assistance and one which could be misleading because we do not know enough about how our controls, as they will affect those in Border counties, will work on one side when they are not applied on the other. Will there be advantages to us as a result of this or will the lack of controls on the one hand and the introducing of them on the other create a confusion we had not envisaged happening? We should be given some further details of what will be the effect of no controls on the British side as set against us having controls at the same time. We should be told how these things will work out in the day-to-day operations rather than talking of big movements of money and big trading accounts. I am sure the latter will be able to find out for themselves but I am talking about people who are not in that league and have not available to them the resources to find out for themselves this information. To a large degree they are dependent on Government spokesmen to clarify the matter so that they can plan their future with more certainty than has been possible in recent weeks.

In the overall we were right to join the EMS and we did not have much option but to do so, just as was the position before we joined the EEC. The only question is: have we made the best job of the manner of our joining? Criticism levelled at the Government for their handling of this matter I believe, to a degree, was well placed but, on the other hand, the Government have had a difficult role to play in this matter. If one is going to buy a cow at a fair one does not approach the seller and say he is taking the cow before bidding. A person at such a fair offers a bad price first, goes away and gets friends to bring him back before bidding properly. Tactically, the Government went about this thing in a wrong manner but I do not doubt that the ultimate decision to go in was the one they had to take. Whether it will be easy or more difficult for us in the future is entirely up to ourselves because if we do not increase production—that means taking up our unemployed—we will not be long there or welcome in the EMS. If that happens things will get worse rather than better but if we buckle down to it and utilise the money now being made available at the alleged cheap rate, in addition to what we have already borrowed, to put our people back to work to create greater wealth by constructing the things we need, then we can strengthen our situation rather than weaken it as we have been doing in the past. If we do that we will be welcome anywhere with our money and it will be easier for us to pay it back.

We are approaching pantomime time and I am reminded of some of the favourite pantomime stories of Jack Cruise. A popular story is the one of the foreign tourist who seeks directions from a local person. The local person, after doing his best to give directions, gets confused and says: "Well, sir, to be truthful if I was going to that place I would not start from here." That story helps to answer the question posed by the Taoiseach when referring to what the Opposition parties had said in relation to our journey to the EMS. The Taoiseach expressed the hope that we would put forward our alternative courses of action. The answer to that request is: "We would not be starting from here." We would not have the country in the financial mess it is in and we would not have it in the social and economic quagmire it is in. We would have a healthier and stronger base from which to go forward. Therefore, the Taoiseach's question is not relevant to the Labour Party because we would have a different set of principles and a different base from which we would be able to do strong and effective bargaining. Unfortunately, because of the Government's financial policies in the last 18 months we do not have a strong base from which to go forward. That is one of the principal objections we have to the terms of entry negotiated by the Government. We hope that as a result of this debate the Taoiseach will be able to improve substantially the terms offered. I understand from what the Minister for Economic Planning and Development said that the decision has been made to enter the EMS but that there were some matters of detail still to be worked out.

It is unfortunate that our economy is in this state. While the recovery from the economic recession which began in 1976 and continued through 1978 is encouraging in some respects it must be stated that this would have happened anyway without the election gimmicks of Fianna Fáil, without the throwing away of much needed revenue. It would have happened also without the serious upsurge in imports which has caused a severe worsening of our balance of payments which was referred to by the Taoiseach as one of the weaknesses in our economy. He said:

Clearly there are difficulties in participating fully and effectively in EMS. These stem basically from the structural problems our economy faces due to our low level of development relative to that of our Community partners. These are reflected in the imbalance in foreign trade.

Progress in industrial employment in the current year is very slow, probably a mere 4,000 to 5,000 net new jobs, and the economy is growing at about 6 per cent. We have no guarantee that the public sector jobs allegedly created with the borrowed money following last year's general election will survive next year's budget.

Fianna Fáil's election slogan of getting the country moving appears to have been successful only in moving the people out of the country. The facts are that between 12,000 and 14,000 people have emigrated since Fianna Fáil returned to power. There was to be before Christmas—and probably there could still be because Christmas is a few days away—an important White Paper, a follow-up on the Green Paper. We have not had this. This morning I listened patiently to the Minister for Economic Planning and Development in the hope of getting some information about this paper. He spoke for a little more than 30 minutes and not once did he mention that very important document.

It is very difficult, if not impossible, to debate fully the terms of entry to the EMS without having the Government's economic and social plan. We have had a Minister for Economic Planning and Development for 18 months but we still do not have a plan. It was never more important that we should have such a plan which could be debated in conjunction with our EMS entry.

When that Department were being set up, while the Labour Party expressed reservations and put down amendments to the Bill, in principle we agreed with the basic concept of such a Department because a great deal of work needed to be done to develop the economy. Since then all we have seen was an original White Paper and a Green Paper. This morning the Minister during his contribution—if I can be so generous as to describe it as a contribution—did not say anything about his Department's plans. More and more he is becoming the front man for the Minister for Finance. He is making statements trying to justify the Fianna Fáil manifesto, trying to abolish food subsidies, taxing children's allowances, restricting social welfare benefits—and succeeding evidently in putting off the October social welfare increases—putting forward the idea of work sharing as a substitute for genuine job creation and as an attempt to justify the placing of the onus of job creation on workers.

We have the usual confusion emanating from that Minister, although this morning he tried to accuse others of causing confusion. Even in relation to the EMS negotiations he caused his own type of confusion and his statement was at variance with the account of those talks given by the Taoiseach. He was also busy lecturing the press and telling them they were misquoting him. He wants to do something more than that, and more than what he has been doing up to now. In recent times he has taken over the mantle of lecturer to the workers on the necessity for incomes restraint and discipline. I have lost count of the number of times he made statements on that subject.

That Minister and his Department have a very important part to play in the context of our EMS entry. The fact is that they have played no part whatever. The only part the Minister played was to confuse the issue. This bears out the criticism which I originally levelled at the Bill which set up that Department. I said then that it would be nothing more than a monitor of public expenditure, a vehicle by which exhortations and lectures would be given to workers about restraint, the necessity for discipline and so on.

As I said, to debate this issue properly we would require the White Paper setting out the Government's proposals as to how they see entry to the EMS on their terms achieving the goals, particularly the 30,000 net new jobs a year. In that connection I would refer to paragraph 2, page 30, of the booklet on the EMS published by the Government which states:

We are aware that the convergence of economic policies and of economic performance will not be easy to achieve. Therefore, steps must be taken to strengthen the economic potential of the less prosperous countries of the Community. This is primarily the responsibility of the Member States concerned. Community measures can and should serve a supporting role.

Where are the economic plans? Where is the White Paper? How can we in all honesty judge the merits of that in the complete absence of information of any kind? It is obvious from that paragraph that the prime responsibility will be on the member States, particularly the less prosperous countries. It would appear that this Government have not even started to work on a plan which is so important that it is part and parcel of the agreement covering our entry to EMS.

The more one thinks of the financial difficulties Fianna Fáil have brought the country into the more one is convinced that the EMS is being used as a cover to get them out of their election commitments particularly their commitment to reduce borrowing this year from 13 per cent GNP to 10½ per cent. The Taoiseach this morning stated:

This support should enable the public sector borrowing requirement constraint on public investment to be released and facilitate any acceleration of investment, especially in infrastructure, over and above that envisaged in the White Paper, "National Development 1977-1980".

That is the escape facility so badly needed by Fianna Fáil and sought by them to get out of their election manifesto commitment in that respect. It is an excuse to break that promise because of the alleged easy loans and at the same time it is an excuse to try to introduce what they term as discipline but which would have been enforced on them in any event by other countries even if this had not happened.

The real questions we should ask are: "Is there a real transfer of resources? If the economy was in order could the Government have borrowed that 6 per cent?" It is generally felt that if the Government's domestic policies were in order it would have been possible to borrow without any EMS at 6 per cent. The Taoiseach and the Minister for Economic Planning and Development have mentioned further details to be worked out. I feel we are not being told all the details about what the agreement is so far. Are there any other written or unwritten conditions in relation to Irish domestic policy? Are there any written or unwritten conditions about a wages freeze and cuts in public spending? Will those be an integral part of the loan arrangement? Are there any such implications? What is the status of the loans? When Deputy Cluskey spoke this morning he asked these questions: "If Ireland were forced to devalue or if Ireland left the system what would the status of the loans be then? Do they have to be repaid quickly? Does the subsidy cease?" This very important information is required at this stage so that we can know all the ramifications of what the Government have done. Are we handing over the management of our economy to the French and the Germans? This party have held the view and still hold it, that the very minimum is a transfer of resources representing a grant of £650 million. In paragraph 10, page 11, of the European Monetary System document it is stated:

Ireland informed its Community partners that it was estimated that, on the assumption that all member states would participate fully in the system from its establishment, additional Community aid of the order of £200 million EUA (£130 million) a year over a five-year period would be received. They were also informed that this estimate—which was approximate—was arrived at after a detailed review of the programme of public investment aiding infrastructural and industrial development and the process of its implementation.

What does the last sentence there mean? We have not seen this detailed review. What does "aiding infrastructural development" mean? That is in total conflict with the agreement finally reached. It is stated in clause 3.4 on page 31:

The funds thus provided are to be concentrated on the financing of selected infrastructure projects and programmes, with the understanding that any direct or indirect distortion of the competitive position of specific industries within Member States will have to be avoided.

How can one aid industry, on the one hand, and, on the other, comply with the condition that there cannot be any of this money used in any way that would distort the competitive position of specific industries here? I hope the Minister for Finance will at least give further details about that because one cannot aid industrial development and the process of that development without leaving oneself open to some kind of accusation at least of distorting competitiveness.

The terms of our entry seem to be riddled with that type of contradiction. There was included in the amount of £650 million originally sought a sum of money to cater for the protection of existing jobs. We have heard practically nothing about the aids to cater for the protection of the existing workforce. An employment subsidy was required. Did our negotiators get it? If they did not get this certain branches of our industrial sector, mainly clothing, textiles, footwear and many other industries, which have already suffered serious difficulties because of free trade, will be in further difficulties because it is obvious that the aids being granted cannot be used to protect jobs. Paragraph 35 begins:

The loans would be subject to the conditions that the borrowing country would have to provide part of the overall cost of projects or programmes and would be limited to infrastructure development.

Where is the aid in this situation to help existing industries? There is no aid. The protection of employment and the creation of employment are of vital importance and must be the guiding lines in all national and international agreements we are part of.

Up to some years ago our jobs were fairly well protected because of tariff barriers and quota restrictions, but our entry to the EEC has meant the ending of these safeguards to all intents and purposes. It now appears that the last line of defence, the devaluation option, will disappear also. Consequently, there will be no defence for our workers. There will be nothing for them in return for surrendering these lines of defence. All that workers are being told is that they will have to exercise restraint, that they will have to limit, if not freeze, their income expectations. That is their reward for allowing themselves to be put at these kinds of risks. A monetary union which lacks the mechanism for taking resources from the rich and giving them to the poor will not benefit this country unless there is a proper regional fund or a real transfer of resources. It is regrettable to note that the disparities that were inherent in the EEC originally have not only been maintained but increased.

In this report to which I refer it is interesting to note that there is the following observation in paragraph 30:

There was no agreement to an increase in the Regional Fund as a means of resource transfers.

Here again where are we to get this help in the absence of a proper transfer of resources from the rich to the poor? In the various documents that have been issued in connection with the EMS and in the various speeches that we have had from the Taoiseach and his Minister on this matter, there has been reference ad nauseum to the need for discipline among trade unions and workers generally. The chances of the success of a policy to restrain incomes would be enhanced only if the burden imposed by such a policy were shared in a fair and just way. For example, there would have to be a clear-cut guarantee that new jobs would be provided and that, more than anything else, there would have to be a means by which wealth could be redistributed. As a corollary to consideration of any incomes policy there must be a policy to distribute wealth. But what have Fianna Fáil done? Their contribution to distributing wealth has been to abolish the wealth tax. That was one of the few mechanisms we had for the redistribution of wealth, but the Government by abolishing that tax have handed the wealth back to the wealthy. I do not know how in such circumstances they can now preach to wage earners and to those on fixed incomes such as social welfare recipients about the need to exercise restraint in regard to incomes especially when only a few short months ago the Government took the unthinkable step of making the rich richer and the poor poorer. There is every sign that large-scale wealth is being concentrated increasingly in the hands of a few large undertakings.

This morning the Taoiseach referred to the necessity for massive investment here, but unless there are imposed stringent investment regulations by the member states there is no guarantee that our participation in the EMS will promote the investment that will be necessary to bring about social and economic development. The Taoiseach talks about this investment as if it were to happen automatically on our entry to the EMS. Unless there is a mechanism to provide for stringent regulations there is no guarantee of such investment.

Therefore, the Government would need to get away from this obsession with wage restraints and discipline among workers. Those who have the wealth and those who can make the investment decisions are the ones to whom the disciplines and the necessary Government restraints should apply. In all the statements we got from the Government this has not been mentioned. It is true to say that over the past year and a half there has been a lot of industrial unrest. This has been due solely to Fianna Fáil policies immediately before and since the general election. In the constituency I was representing prior to the last election practically every factory gate and other vantage points were used by Fianna Fáil speakers telling workers that all they needed to do to have an unlimited amount of money in their pockets was to change the Government. Indeed, I heard some Fianna Fáil speakers telling workers how badly off they were, how badly paid they were, the bad conditions they had—their stamp was too dear, their tax was too high and they were not getting the health or housing facilities that Fianna Fáil would give them. All they needed to do to get extra money was to vote for Fianna Fáil. Of course, that did not happen. Workers soon realised that the promised reduction of £1 in the price of the stamp was shortlived. It was only a matter of months, if not weeks, that the few who did benefit from that lost the benefit. Is it any wonder, having sown those seeds, workers have been frustrated over the last year and a half? Since that time, prices have risen more frequently and it has become more difficult to buy a house. Above all, scores of medical cards have been withdrawn since then. People now find it more difficult to live than they did 18 months ago and we admit that in those days it was difficult enough to live.

It is important, when speaking of wages and making comparisons, to take into consideration the social wage. People, for example, who had medical cards 18 months ago, particularly those with families, can now pay anything between £5 and £10 for medical expenses if any of the children need medical attention and if they have to get prescriptions and so on. With that kind of background, is it any wonder that there is so much unrest which is due solely to the antics of Fianna Fáil in the run up to and since the election? There is no point in talking about the same percentage increase for workers in Ireland as compared to workers in Germany. We must look at the social wage a worker has in Germany and the level of wage he has. It is amazing that even though wages and the level of competitiveness are much higher the inflation rate is much lower. There is another key to the problem besides wages when we realise that countries with the highest wages and the highest social wage are more competitive and have the lowest inflation and unemployment rates. India has the poorest people in the world. They have very low wages and have no social wage. Do we attain full employment by halving everyone's wage and thus create full employment? Is it that simple?

There are a few other points I should like to mention. The Taoiseach this morning spoke about the ritual of opposition and the approach to this. Our approach to this problem has been a very serious and constructive one compared to the kind of approach and preparations that the Government have made. We oppose the terms which the Government have negotiated because we have the interests of people in employment and those hoping to get employment at heart. We have the interests of social welfare recipients at heart and the amount of money which has to be spent on social welfare. Unless we get the proper conditions in this agreement, more and more people will be dependent on social welfare and more money will have to be spent on it.

The social wage is as important, if not more so, to a worker than the money wage. The social wage includes proper pension facilities. This is something we do not have. If our workers had the same standard of living as the Germans, French or Dutch there might be some sense in lecturing about the necessity to practise restraint. At the moment, there is no point in giving that type of lecture given the complete lack of proper wage and social wage. I hope we will hear no more about this from the Government. We hope they will start about getting the protection that is patently required. The Taoiseach expressed certain doubts this morning and we are glad to note that he has at least conceded that there are loopholes in the agreement he has made. We can only hope that, in the short time available to him, he will try to close the loopholes so that we can protect the jobs that are at stake at present.

Earlier this afternoon the Minister for Economic Planning and Development, speaking in this House, devoted almost half of his speech to discussing whether this was the right time to have this debate. As a means of filling up time which he did not wish to use by saying anything that would contribute constructively to the debate it was perhaps a useful strategy. What he did not advert to in his criticism of the timing is that the timing of the debate is valid and is important because the actions taken by the Government and by the Central Bank, in conjunction with and possibly indeed on the direction of the Government, have raised many queries, left many questions unanswered and created many uncertainties which are damaging to this country's interests and need to be clarified. It is important that these issues be raised as soon as possible. The Minister said that the Taoiseach had offered us a debate on Friday evening immediately after his statement. We certainly did not accept that offer because his statement needed to be reflected upon, to be parsed and analysed. We had also to wait to see what exchange control regulations, if any, would be produced, and they were not produced until 6 o'clock; we did not know when they would be produced or in what form. Any debate, to have any value, obviously must follow these events and raise queries arising from them.

On the other hand, and especially given the number of queries aroused by the way the Government and the Central Bank acted, it was important that a debate should take place quickly. The suggestion that these matters should be left unprobed and not dealt with until January is an irresponsible suggestion. The right time for debate was this week. It might have been better—I believe it would have been—had the debate been earlier this week, as we suggested. But the Government obviously are so concerned and bothered by their budgetary problems that they were not prepared to shift from the Tuesday and Wednesday arrangement they had made to discuss their own problems to enable the Dáil to debate this at what would have been the most appropriate time. Nevertheless, several days late the debate is timely. It is the moment to ask questions and seek answers.

However, I am in a difficulty: the questions I want to ask, which are serious questions, and which are being asked in many cases by many responsible people in the business and financial community, in trade unions and in the farming community, are questions which need to be answered at the end of this debate. With due respect to the Minister of State whom I see courteously opposite me it would be important that the Minister replying to the debate would be here while I speak——


Hear, hear.

And it would indeed be normal courtesy to the Leader of the Opposition that that should be the case.

An insult to the House.

I mean no disrespect to the Minister of State but may I inquire is the Minister of State going to reply to the debate?

The Tánaiste.

The Tánaiste will reply. I think the Tánaiste should be here, not merely on grounds of courtesy—because basically I do not stand on pomp and ceremony—but because of the fact that the nature of this debate is such that questions have to be asked. I do not think it is going to be satisfactory to the country and to all the people who have questions in their minds which are disturbing them greatly if they are to be answered by means of hurried notes being passed by the advisers to the Minister as to what I said in his absence. I am wondering whether the Minister of State would take some steps to ask if the Tánaiste could be present to hear my questions correctly.

I am sure the Deputy will appreciate that the Tánaiste will not be interrupting, answering questions, while the Deputy continues the discussion.

He may or he may not—although neither he nor I am immune from that particular disease—but he is going to find it difficult to answer the kind of questions I want to put if he arrives into the House at a later stage and has to read notes scribbled out and try to take them in. With due respect to his advisers, I know, having had experience, one cannot answer complex questions satisfactorily in those conditions. I do think the Tánaiste should be present.

The Deputy will appreciate that the Chair has no function in that matter.

Has it ever happened before that a Minister was not present when the Leader of the Opposition replied; I do not think it has.

Deputy FitzGerald is anticipating the Tánaiste's reply, is he not?

I am not anticipating anybody's reply?

Well, is he trying.

I am not anticipating his reply. I have a number of questions to ask which are questions that the House, the country and many people who have important interests at stake want answers to and, to have them answered, it is necessary for the Minister concerned to be present. However, I cannot afford to delay any longer——

All the Chair can say is that, according to the order of the House, he has very limited time.

I appreciate the Chair's difficulty and it is not in any way the Chair's fault. I cannot stand here with pious platitudes waiting for the Tánaiste to come, because I have a number of important points to make, but I regard his absence in these circumstances, as deplorable.


Hear, hear.

The Tánaiste's view is that a sneer is as good as a reply any day; that is his view.

That is a very unfair statement.

I suppose we should not make remarks about him in his absence, but his absence does tend to provoke remarks.

At the outset of this debate Deputy Peter Barry stated what is this Party's position in relation to the European Monetary System—we favour entry, consistently with our position with regard to EEC membership, in 1972, and with regard to the further development of the Community. I am glad the Tánaiste has arrived at this point.

The Leader of the Fine Gael Party might wish to know that I have been listening to him on the monitor wasting a good deal of his, no doubt, valuable time in this debate complaining about my absence——

To be sitting in a room listening to the Leader of the Opposition on a monitor as we are now told is a deliberate discourtesy. I regarded it as accidental until now, but if the Tánaiste was doing that, sitting in a room, listening to me and refusing to come down, that was a deliberate discourtesy which has not got any precedent in this House.


Hear, hear.

However, that is said and done. This debate is too important for it to either start or end on a note of acrimony and I shall not pursue the matter further since the Tánaiste is now here.

I endorse the words of the Taoiseach this morning, interpolated into the text of his speech, with regard to our commitment to the further development of the Community into a federal-type structure. I agree with him that the European Monetary System could be a step along this road. I am not as confident as he sounds on this point because—as I shall develop later—I have reservations with respect to the way in which this project was launched, through a bilateral meeting between two EEC Heads of Government, and about the way it has been pushed and indeed rushed forward by the Heads of Government in question. I am concerned at what seems to be a very limited and indeed inadequate preparation at international level. I believe the Taoiseach may share some of my reservations but, given his office, courtesy may prevent him from reflecting them in his remarks; nonetheless, sharing perhaps my reservations I certainly share with him the view that it is in this country's interests that we should enter the European Monetary System at this point though there are reservations about the system itself, about the negotiations that have been carried on, about the terms of entry and about the steps the Government have taken since.

The Opposition job during these negotiations has been to strengthen the Government's hand by pressure from behind, to seek, by our advice—based on our experience of four and a quarter years of working and negotiating within the Community system—to ensure that the Government secured the best terms for Irish membership. In pursuing that task it was our job to press the Government in regard to the terms of entry, the scale of aid we would secure, the purpose to which that aid could be put and it was right that we should do so. I expected, frankly, that, at the end, the Government would come up with something much nearer to what they had sought. I share what I believe to be the disappointment of the Taoiseach and the Government that the terms negotiated are so far removed from what was sought, so far removed from the Government's assessment of the amount that would be needed to assist this country to enter this system if Britain also joined, never mind—as the Tánaiste remarked—the much larger sum that would be needed for this purpose if Britain were not to join at the outset.

I have to comment, however, that we, in Opposition, have not been very successful in our job of strengthening the Government's hand. Indeed I have been personally shaken by the incompetence with which negotiations seem to have been handled and astonished by the bungling of their presentation to our own public opinion.

The second task of the Opposition, now that the negotiations have ended in somewhat unhappy and confused circumstances, is to use this debate to press the Government to explain what they have so unfortunately confused, in some cases, or left unclarified in others and, in certain respects, to press them to reconsider actions they have taken—which are I think within their own competence, although on this I would have to seek clarification—in the implementation of the new arrangements. I shall be devoting much of my speech to these tasks and I trust the Minister in replying will take seriously the queries I put and answer them fully so that our people and those in our society who are directly and immediately affected by our membership of this system, as well as those who contingently may be adversely affected in consequence of our joining on these terms, may have the information to which they are entitled as to how this system is to work and how our membership of the system will operate.

My first question relates to why the Exchange Control Order was issued some hours after the Taoiseach's statement. Why was it dated Monday, 18 December, three days after the Taoiseach's speech? Were the Government not aware that this time interval permitted major financial transactions involving outflow of capital because of the notice of intention to impose very severe exchange control regulations and the interval permitted to elapse before the effectiveness of these regulations? Were the Government influenced in this by the hope that they themselves might benefit and that countervailing capital flows might come in in terms of subscriptions of Government stock? Did this lead them to be careless of the nation's interest in permitting an interval during which money could flow out of this country with a view to avoiding feared consequences of our membership and enabling people to profit by the three-day interval for their personal benefit?

How could the Taoiseach say in the Dáil this morning that the outflow in question was not on a large scale in view of the fact that under the provisions of paragraph 3 of the Exchange Control Order, headed "Commitments entered into prior to the date of this Notice"—and the date was Monday, 18 December—permission was given to residents to make payments in Irish currency or in foreign currencies to residents of the UK and to transfer securities where such payments or transfers are due under financial instruments or contracts issued/entered into prior to the date of the notice? This surely means that no one can know what sums are involved because, in many instances, the transfers may yet have to take place in respect of commitments entered into between lunchtime of Friday and Sunday night.

We are not talking here about what money may have left the country because the terms of this order, which announced the intention to operate extraordinary and stringent exchange control provisions as from Monday, were such as to permit—indeed, virtually to encourage and incite by virtue of the words used—people to enter into commitments which they could then implement at any date in the future, as long as such commitments were entered into during the weekend. Many people and their advisers were busily at work during the weekend doing precisely that.

We will leave aside the question of whether planeloads of money left the country. This has been disputed and also very strongly asserted. I feel anyone who hired a plane to take money out of the country must not have read the exchange control notice; he need not have wasted his money in hiring a plane because all he had to do was enter into an instrument or contract at any time up to midnight on Sunday, ample time for people to enter into commitments involving many millions they may have wanted to get out of the country.

In view of the six months advance warning of this possible eventuality and the weeks that elapsed after the European Council meeting, why was the notice so badly prepared that it had to be issued on Friday with many verbal corrections, amendments and additions? Why were these not then furnished in writing? Even days afterwards those concerned were having to work with a document with scribbled notes on it about what they had been told. Why were they left in the position during the period when the Central Bank were still answering inquiries that they could phone and get three different answers from three different people? Perhaps it was just as well for the Government that there was a strike in the Central Bank because it gave the Government time to decide what answer to give, so that one answer would be given to a query rather than two or three different answers as was the case before they stopped answering queries.

Why must our exchange control provisions be so much more severe than those in all other EEC countries, Denmark excepted? What did the Taoiseach mean by suggesting that our exchange controls are less severe than those of most of our partners? He made that statement. Surely he must have known that this is not the case. I do not believe the Taoiseach would deliberately mislead this House on a matter of this kind; I am not so alleging but I cannot understand how the Taoiseach could have allowed himself to make a statement so at variance with the facts which are available to anybody in the annual report on exchange restrictions published by the IMF. The Taoiseach's lack of awareness of this and other matters had disturbed us very much throughout the negotiations. Is he not aware that with the single exception of Denmark all our EEC partners permit in one form or another portfolio investment abroad by residents, that is, the buying of stocks or shares in other countries? I will give examples and all I am about to say is verifiable.

In the case of Belgium and Luxembourg, portfolio investment is allowed through the free market and no permission is required by residents. Residents of France are permitted to undertake the purchase of French and foreign securities, with the exception of foreign government securities with a maturity of less than five years and this is to protect investment in short-term French Government stock. Germany does not have controls in respect of domestic and foreign securities, which may be exported by residents. In the Netherlands there are no restrictions, with the exception of unlisted fixed interest securities on the Euro market denominated in guilders and issued by non-residents. It is a somewhat esoteric form of purchase of foreign securities. There are no other restrictions in the Netherlands. In Britain foreign securities can be freely purchased on payment of the dollar premium and in Italy they can be purchased on condition that a non-interest bearing deposit amounting to 50 per cent of the value of securities is made with the bank making the transfer. This deposit can be retrieved when the foreign security is sold and the profit is taken and there is no loss. All this information is set out in this report on exchange restrictions which I have before me.

Why did the Taoiseach give the House incorrect information? Why was the House misled this morning on a very important matter and why was this statement made which is demonstrably incorrect? Why is there no compensating relaxation of exchange controls within the rest of the EMS area? If it is necessary because we are entering the EMS and leaving the sterling area to impose these kinds of controls in respect of the UK and the sterling area, why is there no compensating relaxation vis-à-vis countries with whom we are entering into relationships, all of which, except Denmark, have this kind of freedom? Do the Government not accept that by imposing such drastic controls without any offsetting relexation vis-à-vis other countries of the EMS they are suggesting that the Irish £ is and will be very weak, incapable of surviving without intense protection with respect to all other currencies, including those of our EMS partners?

Denmark is the country within the "Snake" which had to devalue on several occasions and it is in those circumstances that the Danes have very severe restrictions. Why do we invite comparison with Denmark by copying —and we would appear to copy very closely—the Danish regulations? Why do we have such stringent regulations? Do not the Government accept that in applying these provisions they have cast doubt on the strength of the Irish £ in a way which is most unwise and, I believe, unnecessary? Was the decision to impose such drastic restrictions that of the Government or the Central Bank? If it was the decision of the Government and if the Central Bank were of another view, as is widely believed in financial circles in Dublin, why did the Government panic and introduce measures which may be damaging to confidence in our £ and which will be very difficult to abolish without risking speculative pressures which otherwise would not have existed in this scheme? Has the Government's attitude been that because they do not know what will happen they will lock every door, regardless of the dangerous effects of such a defensive action?

Why did the Government not decide simply to require registration of accounts outside Ireland and then to monitor movements in respect of securities or deposits, holding back from this drastic and destablishing action unless and until a need began to appear through large-scale movements, which many informed people believed would not have taken place in those circumstances but which did take place during the weekend in face of the threat of very severe restrictions to be imposed after three days?

Has the Deputy any evidence of that?

There is evidence of such movements and such action being taken. Was this severe action of exchange control taken by the Government because of British pressure? Was there a threat or implication that if we did not control movements the Bank of England would do so, perhaps in a manner less advantageous to us? Is this the explanation for the action? How much damage will this kind of action do to the inflow of people from the United Kingdom to this country, for example, on retirement? Will such people not now be reluctant, as they have never been in the past, to come here with their money? If resident here, they were able previously to invest it freely. They know now they will not be able to do so.

If the Government got the right terms from our EEC partners, why is all of this necessary? Basically that is the question we have to ask. What we have to try to find out in this debate is what precisely was involved in the renegotiations last week. What exactly is involved in the loosening of constraints on the use of £225 million per year from the European Investment Bank and the Ortoli Facility.

First, have the Governors of the European Investment Bank agreed to these constraints being loosened? I know how rigid they are. As Minister for Foreign Affairs, I can recall the Ministers for Foreign Affairs in Council wishing to take certain action involving the granting of EIB loans and being informed this was impossible because the Governors of the EIB—although they were their colleagues as Ministers for Finance—would not, with that hat on, agree to such loans being made. Given my experience in that respect, it is fair to ask if the Governors of the European Investment Bank have agreed to these constraints being loosened.

Will the Tánaiste explain precisely what the Taoiseach meant last Friday when he said, "I am glad to be able to say now that I have an assurance as to the interpretation of the Council's resolution which is satisfactory in so far as the uses to which the resources may be put. They will not be wholly restricted to infrastructure". For what exactly can we use this money? Why have we not been told this information? How have the terms of EIB loans been so altered for this purpose? Does this removal of the loosening of constraints apply only to the Ortoli Facility or could it be the case that the money is merely a topping-up of EIB money? We should have answers to these questions.

I should like to ask the Tánaiste how can he reconcile the extraordinary speech of the Minister for Health and Social Welfare on 13 December in this House in which he identified "one factor more than any other" as "contributing to our low level of economic achievement". He identified it as being the inadequacy of our infrastructure. How does the Tánaiste reconcile that with the Taoiseach's quiet air of triumph in announcing to the House last Friday—and echoed by the Minister for Economic Planning and Development here this afternoon—that he had got us off the hook of using the money to be borrowed from the Community and our partners for infrastructural purposes? At the same time the Minister for Health was saying that we must have the money for that purpose. At best there was an extraordinary lack of liaison between the Minister for Health and Social Welfare and his Taoiseach and colleagues. Perhaps that is not surprising. At the worst this Minister's speech, which was notably devoid of any reference whatever—and I emphasise this fact —to the Taoiseach and his colleague's negotiation of this arrangement, was a sabotage effort. Some of his colleagues may well feel that the speech with these statements that "we must admit that our economy is doing very badly" and that whatever criteria we employ "we will find, and I do not like to use the word, that we are in a backward situation", was not a very helpful contribution to the debate and that the Taoiseach's decision to require him to participate in it has blown back in the face of the Government and the Taoiseach.

The only saving grace—and I hope I can prevent it being a saving grace—was that the Minister for Health and Social Welfare made his contribution late enough on the evening of 13 December to ensure that, given the time constraints of our newspapers, it would scarcely be reported. However, I think it worth drawing to it the attention it did not get then but which it certainly deserves.

I should like to return now to the main theme of my speech. What did the Taoiseach mean by saying he had been assured "that there will be sufficient flexibility as to the manner in which the interest subsidies operate to enable us to benefit fully from these arrangements early in the new year. If we are to benefit in this way at the outset, does it mean that we are now committed to borrowing £225 million a year each year from the EIB and the Ortoli Facility? There seemed at one point to be a contrary implication. If this is the case, does it mean that the Government are now committed to borrowing money at an interest rate they do not know. The House will recall that the Tánaiste said in the Dáil last week, at Volume 310, column 1395 of the Official Report, that "nobody knows" what is the interest rate on the Ortoli Facility and the Minister for Economic Planning and Development intervened immediately afterwards to add that the figure of 9 per cent in the statement of the European Council "was used only for finding the value of the subsidy" and was not the interest rate.

How have we come to agree to borrowing money without knowing the interest rate? This is what the Government claim they have done. Do the Government agree that, given that the city of Copenhagen is currently borrowing at 7.38 per cent repayable in 15 years—the same period as the loans we are proposing to get—that we as a State, within the EMS, should also be able to borrow at or near this rate? If this is so, what is the advantage of borrowing from the EIB? Is not the interest rate of the EIB 9 per cent, and if it is not that figure what is it? How do we know if there is any advantage in borrowing from the Ortoli Facility if the Tánaiste proudly tells the House that we do not know what will be the interest rate on this money? Are we committed to borrowing money at an unknown interest rate? Have we any assurance that this money will not cost us more than if we borrowed, as the city of Copenhagen have done, in the open market? Maybe their credit is better than ours.

I should like also to ask if the easing of constraints referred to last Friday by the Taoiseach permits borrowed or grant money to be used to help industry? Have the Government failed to get any modification on EEC constraints on help to industry to maintain competitiveness? Does the limiting clause of the original European Council communique in relation to this still apply, despite renegotiation and despite the Taoiseach's statement?

I come now to a very important point. I recognise it is technical at one level and it is also of enormous political and economic importance to us. Is it correct, as reportedly stated by the Minister for Finance at the Finance Council of Ministers, that the Government have opted for the 2¼ per cent margin instead of the 6 per cent margin of fluctuation for our currency? If so, why have the Government done this? Why have they not made a formal announcement? Why did the Tánaiste refuse to answer the question on television? Why did we have to hear in the newspapers that he told this to the Council of Ministers when we, the Irish people and the Dáil, have not been told? Is it true that the Government have suggested as the reason for the decision "to reduce speculation"? If so, do the Government not realise that the opposite is true—that by making the break with sterling much more likely to happen sooner, it has increased the danger of speculation against the Irish £?

Do the Government not realise, as Deputy Barry said earlier today, that this narrow margin could force a break with sterling even if sterling maintains its relationship with the central EMS rate within the 2¼ per cent band and even if every EMS currency does the same? If Deputy Barry and I are incorrect, let us be told. We are not experts in this matter. We do not have access to the information the Government have. We have to rely on what little the Government have said and from what we read in the papers, which show that other Governments are more liberal with their information to their parliaments than ours is.

Perhaps we are wrong. My understanding is that the UK Government have entered into at least a verbal commitment to endeavour to ensure that sterling remains within 2¼ per cent of the central EMS rate. We are committed, however, to retaining our currency within 2¼ per cent of every individual EMS currency. As Deputy Barry pointed out this morning, if the Danish Kroner rises 2 per cent above the central rate level of the EMS and sterling, which has no obligation vis-à-vis the Kroner but only vis-à-vis the central rate of all the currencies, falls even by 1 per cent, we would be obliged to break the link with sterling in order to remain within 2¼ per cent of the Danish Kroner. Given this situation, if I am correct, is there not a very strong reason to favour the 6 per cent margin? Is the 2¼ per cent margin not one that makes our currency very vulnerable to a break with sterling encouraging speculation? We will remain vulnerable to specualtion even after drastic exchange control measures have been taken, if I am right in what I have just said.

When Deputy Barry raised this earlier this afternoon I noticed the reaction of the Minister for Economic Planning and Development. The Minister asked what help it would be in the situation outlined by Deputy Barry—the Danish Kroner up 2 per cent and sterling down 1 per cent—for us to be in the 6 per cent band. The Minister fell remarkably silent when Deputy Barry answered him and almost immediately after left the House. In the Minister's half hour contribution, nearly half of which was devoted to this being the wrong time for the debate, he made no reference whatever to the issue. If we had misunderstood the position in some way, if the problem, I would have expected him to say so, not across the Floor of the House but during his speech. I hope that the Tánaiste, when concluding, will advert to this issue and will answer the point, which ought to be clarified here and now. If Deputy Barry and myself are correct in this, does this not mean that we have deprived ourselves of control over the moment at which a break with sterling would occur, so that it can now happen at a very disadvantageous point of time for this country—unless as pointed out in The Irish Press business page yesterday, we are going to take upon ourselves the whole burden of maintaining the value of sterling vis-à-vis all individual EMS currencies. I take it that the Government cannot go that far.

Our currency remains vulnerable despite the drastic exchange control measures. We are the second most vulnerable country in the EEC to speculation through trade because of the very high ratio of trade to final demand. By speculation through trade I mean such actions as bringing forward or postponing payments for imports or receipts for exports—for example, giving two week's credit instead of four or extinguishing a revolving credit and paying cash instead. Are the Government not aware that these kinds of actions have destabilised sterling, which is a much larger currency than ours? Have the Government not encouraged such actions by imposing controls so drastic in other respects as to encourage the belief that the Irish punt is very vulnerable, needs such heavy protection and is therefore to be avoided by traders.

I appeal to the Government to reconsider the decision to undertake to keep within this 2¼ per cent band in view of the combination of the vulnerability of our currency, like other currencies of countries with a high ratio of trade, and the technical dangers which I described arising from the fact that the UK do not share our obligation to remain within this margin of four other EMS countries. Unless the adoption of this 2¼ per cent band was imposed on us in these negotiations and has been accepted as a condition of aid, we should now reconsider it. I remain open to correction on that point. If, for example, it is the case that, contrary to what has been reported or contrary to what I understood, the British Government have accepted an obligation to maintain sterling within 2¼ per cent of each EMS currency, the argument would not apply. We should be told that. It is wrong that we should be left in a position of doubt as to whether our currency is not made extremely vulnerable to a break with sterling at a time and in a form which is not in our interests.

It could well be that it would be in our interests at some time to change the relationship of our parity with sterling. There was a period when it seemed to our Government that this might be about to happen. It would not be to our advantage to change the parity with sterling, being forced to do it by events outside our control by something like three-quarter per cent for a technical reason just because the Government took a wrong decision about the margin of manoeuvre in choosing 2¼ per cent rather than 6 per cent. It would not be to our advantage to confuse everybody and make all our transactions between Northern Ireland and Britain difficult, without there being a reason for a significant difference with sterling. If sterling were to collapse, to fall very sharply as it did in 1975 and 1976, it could be that the right decision for us would be to separate ourselves from it. But we should not find ourselves in the position of doing so by accident because of how we have handled things. If I am wrong, I hope the Tánaiste will explain the position. It is important to be reassured on this. I would be more than happy to be told that I am wrong and that there is a sufficient guarantee as between sterling and each EMS currency, or that in some other way this danger does not exist.

The House and the country are entitled to be told why the 2¼ per cent parity has been chosen as against 6 per cent. It surprised many people. It has not been explained. It has not even been formally stated. It has merely been reported from the Council of Ministers' meeting. It is absurd that I, as the concluding speaker here, should be in the position that I do not know what the Government have decided except by reading newspaper reports of what they told other Ministers elsewhere. There is no reason why we should not be told what other Ministers and the press are told. We should have formal confirmation. That should have been done in the opening speech. The whole issue has been trivialised by the way in which the Taoiseach handled it and for lack of information in his opening speech. The issue has been trivialised to an extent beyond belief by the Minister for Economic Planning and Development, who in his contribution did not relate to any of the issues at stake and whose contribution was entirely political in character and unbecoming to someone so recently an academic.

My queries are genuine. They were not raised for the sake of making difficulties. They were raised because they were queries put to us by people in various walks of life who are concerned about the situation, who are confused by it and who feel that it is essential for us to get this kind of information so that they may be able to operate in some conditions of reasonable certainty about the future. We have been pressed to get answers to these queries. Given that the other possible sources of answers to some of them, such as the Central Bank, have been closed, the only person who can answer the questions at this stage is the Tánaiste. That is why this debate had to be used for this purpose.

I regret that I have had to raise so many issues. I would have preferred to have debated this in more general terms. I would have preferred to have discussed the possible benefits of membership in the long term and how we can best avoid the dangers which are certainly lurking in the shoals which we may hit in the course of navigating through this system. It has been necessary for me to spend time on these issues so that they may be clarified one way or the other. I will sum up by reasserting that whatever concern we feel about the way this system was launched—and we are concerned about that—and about the way it was pushed internationally, by the way our Government negotiated and in particular the way they explained the outcome in five different ways we nevertheless believe it would not be in the national interests for us to stand back from this enterprise. We must, with our seven partners, endeavour to make the system work. We must try to create a zone of monetary stability in this part of the world. We may all fail but the attempt is worth making and it is right that we should be part of this attempt. It is right that we should do so even though the United Kingdom has not done so. We can hope that the United Kingdom will also join before long and give us the practical desirability of maintaining a one-for-one relationship with sterling, if at all possible in the interval, until the UK joins. In the absence of the reasons for having a significantly different value for our currency at this time, we should so manage our membership as to minimise the danger of this relationship being unnecessarily terminated at a time not of our choosing and almost certainly not to our advantage.

Having said this, and recognising the deficiencies of the negotiations carried on on our behalf, we support participation in this system. We do so with doubts and with qualms. Given the obvious bungling of the negotiations and the extraordinary way in which five different accounts of the results were given to the country it would have been easy for us to make the excuse that it had been so badly handled and so messed up and so badly explained that in protest we must vote against it. That would have been perhaps the easier course for an Opposition party to take, one perhaps which would give readier satisfaction to active party supporters who naturally prefer the party in opposition to be opposing the Government. It is not an easy thing for us to do, to support a Government who have made such a mess of things and it is only the strongest considerations of patriotism and of concern for the national interest which impel us in these circumstances—and despite having every excuse and every reason in one sense to oppose the way the Government have handled things—to support membership of the system and I believe we are right in doing so. I know that to entrust this country to the EMS while this Government are in control carries dangers. I know that it may go wrong. I know that nothing in the record of this Government over the last 18 months gives grounds for confidence that our membership will necessarily succeed and I know that if in fact we fail we might have got some kudos by having opposed membership at that time and saying "I told you so". That was open to us but we decided not to do that. We decided not to fall into that temptation either but to support membership with deep qualms about the prospects of a country operating within the system which subjects us to such constraints and in the hands of a Government who have shown themselves so extraordinarily incompetent in the management of our economy during the last 18 months.

The wrigglings and antics of Deputy FitzGerald in the last few minutes illustrated clearly the dilemma in which the Fine Gael Party find themselves and also highlights the whole manner in which they have attempted to approach the EMS debate. It is one of the most important matters that has ever been discussed in this House in the lifetime of the great majority of the Members and their whole performance has been one of niggling, of pursuing minor points ad nauseum, time wasting and in the end in the last few sentences Deputy FitzGerald says he would have liked to have discussed the wider issues involved. Why did he not discuss them? He has had ample opportunity not only in this debate but in all the other ones and he has barely touched on them. I resent very much, coming from the Leader of the Fine Gael Party, the mischievous action in lending such weight as he has to some reports which apparently have appeared to the effect that there has been a great outflow of funds from this country over the past weekend.

Why does the Tánaiste not ask the banks along the Border?

The Deputy should wait for it. Apart from when I came into the House and responded to what Deputy FitzGerald was saying before I came into the House, I did not interrupt him at all except on that one point, he having made the assertion and repeated it again I asked him had he any evidence to support it and he said that there was evidence. But it will be noted that he did not produce one iota of evidence to support it. Nor did he suggest any good reason why people would wish to take money out of this country over the past weekend. All the evidence available is to the contrary; the money is flowing in. I suggest that it is thoroughly irresponsible and mischievous for the Leader of the main Opposition party to lend credence to that kind of report in the absence of any scintilla of evidence. But this is what we have come to expect in the course of this debate.

The Taoiseach indicated to the House this morning that I would give some indication of the outcome of the meeting of the Economic and Finance Ministers on 18 December. At that meeting the Irish and the Italian Governments conveyed their decisions on participation in the EMS as from 1 January 1979. I also indicated on behalf of the Government our decision to enter the system on the basis of a margin of 2¼ per cent. I shall deal later with the reasons why the Government opted for the standard margin of 2¼ per cent rather than a wider margin. As requested by the European Council the EcoFin Council dealt with a number of other technical topical matters related to this new system. The Community regulations were agreed, one defining the composition of the European currency unit and the other authorising the European Monetary Co-operation Fund to receive monetary reserves from the Central Banks and to issue ECUs in return. There is agreement also on the arrangements to increase the medium-term financial assistance scheme and a Council decision will be necessary for this purpose. Because of the outstanding problems on the agricultural side, referred to by the Taoiseach in his opening statement, France has placed a reserve on these Community instruments but I expect that this will be lifted shortly or, failing that, that some other solution will be found to enable the system to come into operation as from 1 January next. A further matter settled by the Council was the procedure for fixing and notifying central rates in terms of the ECU for the start of the system.

With regard to the resource transfers the position is that at the Brussels European Council Ireland was offered loans totalling £225 million a year over a five-year period starting in 1979 from the European Investment Bank and the Ortoli Facility. These loans will be repayable over a period of 15 years and will bear interest at the current rates prevailing when the loans were taken out less an interest subsidy of 3 per cent. There would be a moratorium on repayment of principal of either three or five years. The period was not finally settled by the Brussels Council. The value of the interest subsidy will be £45 million a year over the five years if all the loans were taken up. At the European Council the Taoiseach said that he would consider the offer further in consultation with the Government to see whether there could be any basis on which Ireland could make a positive response.

As the Taoiseach has mentioned, after the European Council, he telephoned Chancellor Schmidt to discuss certain possibilities which had emerged from the Council discussions. It was agreed that these possibilities should be further explored and arrangements were made for a meeting in Luxembourg on 11 December at which Irish and German officials participated. Further contacts followed, including a telephone discussion between the Taoiseach and President Giscard D'Estaing and a meeting in Luxembourg and Brussels attended by officials from Ireland and the other countries concerned. Arising from these discussions, it was agreed that a number of the more prosperous countries would make available to Ireland, on a bilateral basis, substantial resources in addition to the amounts offered by the European Council. While the details of these bilateral transfers remain to be settled, the overall grant element in the Community and the bilateral arrangements will be about £70 million per year during the next two years with an additional £45 million per year for a further three years.

While there is a substantial difference between the amount agreed following these bilateral contacts and the £130 million per year originally sought by Ireland, it must be realised that the figure of £130 million was based on certain assumptions regarding the future trend of sterling. In the light of the UK Government's stated intention to maintain the exchange rate stability of sterling, the Government are satisfied that the additional resources offered in the bilateral package are sufficient to help us overcome the difficulties which EMS membership will impose during the critical transitional period of two years. I should like to add—I imagine it is fairly obvious to anybody who thinks about it—that there are certain other factors which, naturally, the Government would have taken into account and one of those would have been an assessment of the likelihood of the eventual entry of the UK into the system.

Deputy Cluskey asked if the Government were still committed to reducing the borrowing requirement in 1979 to 10½ per cent of GNP. I should like to tell the Deputy that the subsidy element of the EMS package would increase Exchequer resources and, therefore, enable some more expenditure to be incurred without additional debt. The precise level of the borrowing requirements for 1979 is a matter for consideration in the budgetary context.

With regard to exchange control I should like to state that following our decision to join the EMS and given the British decision not to do so for the present, I took the necessary statutory measures, under the powers which the Oireachtas gave me recently in the Exchange Control (Continuance and Amendment) Act, 1978, to extend our exchange controls to the UK. Heretofore, it had been possible to avoid such controls because the two countries effectively formed one monetary area and both applied similar controls to third countries, thereby protecting jointly the interests of the sterling area.

That arrangement, of course, could not continue indefinitely in the situation in which we joined the EMS while Britain remained outside. I have, therefore, extended to the UK controls similar to those that apply to other member states of the EEC. The fact that the British authorities have decided not to apply controls to us at present—a decision which I welcome—does not affect our position in this regard. On the contrary, they would have found it necessary to restrict transactions with this country if we had not acted.

Our exchange control must, in future, be an independent one, aimed at protecting our exchange rate, at supporting external reserves adequate for that purpose and, in particular, at preventing speculative movements. Given the importance of the UK in our external trade and payments the control, to be effective, must, of necessity, include Britain and Northern Ireland. I do not think there can be any dispute on that basic point.

As regards the degree of control, I should like to emphasise, firstly, that it is mainly of a supervisory nature. Current transactions, that is payments related to trade and normal commercial operations, are not restricted, apart from some necessary documentation which has always been required for countries other than the UK. I intend to ensure, as far as possible, that such transactions will not be impeded and to that end the documentation requirement has been considerably lightened. Secondly, the great majority of people will be largely unaffected by the controls. Small payments abroad, up to £100 have been totally exempted. In addition, personal capital transfers abroad, for example, legacies and gifts given to members of a family living in Britain or other countries, may be made without difficulty through a bank. Foreign exchange is readily available for travel abroad and the basic allowance of £600 per person per journey cannot be regarded as ungenerous. Higher travel allowances are granted where they are needed.

The control is restrictive in its application to the export of currency, the holding of bank accounts abroad and investment in foreign, including UK, securities. These are fundamental if we are serious about regulating capital flows. The requirement to close bank accounts in the UK, unless their retention is permitted for business or other necessary reasons, and the restrictions on dealings in foreign securities may appear to be severe. I concede that they represent major changes on the situation that has for long existed. The omission of such measures, however, would have seriously undermined the control. In matters of exchange control, as in the taxation area, one cannot easily find a half-way house. If one closes one door those who have a mind and will to do so will quickly find others that have been left open or even slightly ajar.

I want to emphasise that these measures are necessary precautions. Other countries, especially small countries, have similar controls and, indeed, some more severe than ours. We have not taken them from a position of weakness. Our external reserves are strong and if we have the collective will to show discipline and moderation we can reap the benefits of membership of the EMS.

Can the Minister give me an example within the EEC, other than Denmark?

I could and I will in due course but not during this debate because I have a limited time available to me which I do not intend wasting. I will give the Deputy details in due course.

Can the Minister name one country, besides Denmark?

Why besides Denmark? What is wrong with Denmark?

Because the Taoiseach has said that most other countries have more severe restrictions.

I appreciate that the introduction of exchange controls vis-à-vis Northern Ireland and Britain represents a major change and must cause some initial inconvenience. However, even in the few days the system has been operating, it seems clear that the banks, businesses and the public generally, are quickly becoming accustomed to the new procedures. It is my aim to ensure that the control is applied in a flexible and reasonable manner. I shall be glad to introduce relaxations where they can be made without weakening the credibility of the system. Finally, I trust that everybody in this House and outside will appreciate that the controls are a necessary adjunct to creating the conditions for an independent exchange rate policy—something that has been discussed for years but never acted on until now—and will do their part in ensuring that they are observed.

I should like to say something brief in connection with the situation in the Central Bank. The Central Bank is charged officially with the administration of exchange control but a lot of its functions are delegated to the commercial banks as is the normal procedure. The situation which has arisen there—I do not wish to exacerbate it unduly—is that there was a claim for an increase in pay and I am not commenting on the merits or demerits of that claim. It went to the Labour Court which made a recommendation and the recommendation was rejected. Notice of intention to serve strike notice had been given and the strike would have commenced on 15 January. That was the position until a few days ago when action was taken by some members of the staff who refused in any way to do work relating to the EMS. This included, I understand, the refusal at the switchboard to put through any calls that related to EMS, to type any material relating to EMS, and other steps. As I understand the position that action was taken not in relation to the EMS as such but in relation to the claim to which I have already referred.

I want to make it clear that as far as I am concerned any action by anybody—and I am not referring now solely to the staff in the Central Bank—which could run the risk of allowing our reserves to flow out of the country or which could affect ultimately the value of the Irish pound cannot be regarded lightly not only by the Government but by the general public. It seems to me that it is time people understood the relationship that should exist between agreements, the consequences of action that they may take and that where there are procedures for dealing with grievances they should be used. If by any chance in any case there are not procedures, action should be taken to get such procedures. I doubt if many people who understand the implications of action which could lead to a depletion of our reserves or a questioning of our ability to administer the system within EMS, could approve of the kind of action we have seen in recent times in relation to EMS. I would hope that wiser counsels in the national interest will prevail in regard to not only this dispute but any other matters which might arise. There are procedures for dealing with disputes but the whole national interest ought not to be put in jeopardy in connection with grievances of this kind.

The position about our economy is that as far as the Government are concerned we look forward with confidence to the successful participation by Ireland in the EMS. There is no reason why the Irish pound should not be able to prove itself a solid member of the system. The performance of our economy this year has been most impressive and has been recognised as such by our Community partners, both implicitly and explicitly. The expected growth of about 7 per cent will be the highest for any member state. In line with the Government's economic strategy the main impetus came initially from the increase in consumer demand. However, increased investment, especially in plant and machinery, has progressively taken up the running. This will expand the capacity of the economy and will provide a firm basis for achieving self-sustaining growth.

The high growth rate has not been achieved, as many had earlier feared it would, at the expense of the balance of payments position. The deficit on current account this year is now expected to be quite small—about £150 million or roughly of the same order as the deficit in 1977. The volume increase in our industrial exports will be of the order of 14 per cent, which is more than twice as large as the rate of expansion in world trade. This year the average in the consumer price index is down to 7.6 per cent, a striking reduction when compared with the figure of 18 per cent in 1976.

The underlying state of the economy is a vital factor in influencing confidence in a country's currency. Of major importance also is the level of the country's foreign exchange reserves, which act as a backing for the currency. On this front also Ireland has every reason to be confident of our ability to participate effectively in the EMS. I do not know if it is generally known but I want to put it on record that as at 18 December our foreign reserves stood at a record figure of £1,300 million. This is equivalent to over four months' imports, a very high ratio by international standards. In contrast with the position some years ago the reserves are held in diversified form. Sterling now accounts for less than 20 per cent of the total and there are significant holdings of other Community currencies, as well as of US dollars and other international assets. The exchange control measures introduced this week will help to ensure that the reserves are maintained at an adequate level.

The increase in the reserves has not been achieved through borrowing in foreign currencies by the Government. Net borrowing in foreign currencies in 1978 is likely to be only about £25 million. In fact much of the foreign borrowing activity this year has been directed towards refinancing existing debt for longer periods and on better terms with, I might add, a considerable saving to the Exchequer. The reserves have of course benefited through foreign purchases of Irish Government gilts. Total net sales of gilts to domestic and foreign purchasers this year come to about £550 million, representing a massive display of confidence by investors in the Government's handling of the economy.

Because of the gradual build up of foreign investment in Irish Government securities in recent years, and given the prominent part played in it by institutional investors such as insurance companies and pension funds, it can reasonably be assumed that the bulk of the inflow is stable long-term investment. If one is to judge by the continuing strong sales of gilts and the hardening of prices in the past few days, confidence in our economy and the currency has, if anything, been strengthened by the Government's decision on participation in the EMS.

Confidence in the Irish economy continues to be high also among domestic and foreign promoters of industrial projects. The IDA set a target of approving 27,000 jobs in 1978 as part of their industrial development programme. Results to date indicate that this target—the highest ever set by the authority in any one year—will be significantly exceeded. Despite increased international competition, there has been considerable success again this year in attracting new industries from overseas. The IDA estimate that approximately half of the new investment in manufacturing industry up to 1980 will be made by new overseas firms setting up plants here.

All this provides an excellent background of achievement and confidence for our entry into the EMS. Provided that we, as a nation, take the opportunity, there should be substantial economic advantages for this country as well as an increase in our general standing and influence in the Community. If we pursue the right policies we can reap these rewards. It is also important to remember that within the EMS we will have support and assistance from our Community partners.

There is, firstly, the substantial transfer of resources which the Government have successfully negotiated. We would not have obtained this transfer outside the system. Secondly, as fully fledged participants, we will have access to the expanded balance of payments credit facilities that will underpin the new system. These will amount to 25 billion European Currency Units or some £17 billion. This truly enormous amount of credit will ensure that the Community are well equipped to help participating countries to overcome speculation or balance of payments difficulties that could otherwise put pressure on exchange rates. The availability of mutual assistance of this order of magnitude gives a firm indication of the solidarity behind the EMS and will act as a deterrent to speculators.

Against this background the Government are fully confident about entering into the EMS. Our decision to adopt the normal margin of 2¼ per cent rather than a wider margin is an indication of that confidence. The adoption of a wider margin could well have been interpreted as a sign of weakness and might indeed have invited pressure on the currency. There was the consideration in any event that resort to a wider margin could only be temporary. The Government were anxious that we should seek to realise as quickly as possible the benefits of full participation in the system. It seemed to me to be suggested by Deputy FitzGerald that if we had adopted up to 6 per cent wider margin, which was open to us, that we could dictate when the break with sterling would occur. If I understood him correctly, I thought that was what he was suggesting.

I said it is likely to happen accidentally and unfortunately by a margin of no significance.

The Deputy referred on two and maybe three occasions to the possibility of this happening at a time which did not suit us and so on and certainly by implication, if not specifically, suggested that the wider margins would enable us to dictate when this would occur. I imagine he knows as well as I do that that is not so, that it would not do any such thing. As far as we are concerned, in the weighing up of the various issues involved and the balance of advantages and disadvantages, we are quite convinced that the narrower margins suit our interests much better than the wider margins would. I take it from what Deputy FitzGerald said that as far as he and his party are concerned they would favour wider margins. If they would, I would like that to be on the record.

Does the Tánaiste propose to answer the points Deputy Barry and I raised?

Deputy Barry and Deputy FitzGerald seemed to me to be raising points simply about how the system works, which has been explained ad nauseam in this House. The question of how within the bilateral rates this would operate has been explained ad nauseam in the House and I do not think it is necessary to go over that again. However, I will say that any realistic assessment of the situation would have regard to the likely movements in the most likely currencies. I do not want to add any more than that to it.


I completely reject the charge made——

We asked specific questions and we are entitled to answers.

I think I am right in saying that so far we have had a very smooth debate without interruption. I hope it will finish that way.

The Deputies should, by now, know how the system works. Any realistic assessment of it by them would have adverted to the likely movements in the likely currencies. They did not advert to any such thing. I have a limited time available and I do not intend to waste it on this kind of nonsense. I completely reject the charge by Deputy FitzGerald in his amendment that the Government's management of the nation's finances has been unwise, extravagant or anti-social. Let us take the alleged extravagance and lack of wisdom first. Any economic policy must be judged by the results it achieves and the cost it incurs. By this standard our policies have been more than successful, they have been prudent and have not been extravagant.

I said in the debate on the Adjournment last week and I have already stressed today, that we have recorded economic advances this year which, taken together, are unprecedented in the history of the State. Growth in national output, as I said, will be up to 7 per cent, the increase in total employment will be the highest ever achieved and the rate of inflation has been cut to slightly over half what it was when we assumed office about 18 months ago. We achieved those results within the financial constraint which we imposed on ourselves. The public sector deficit this year will be within the limit of 13 per cent GNP, which we set ourselves at the beginning of the year. The Government have always been conscious of the fact that a 13 per cent borrowing requirement cannot be sustained indefinitely—I made this clear in the 1978 budget—and that it was only a temporary feature.

We are committed to reducing it over the coming years but the stimulus which we gave to the economy in this year's budget and the strategies laid down in that budget have laid the foundations on which the continued growth that we need can be supported by the private sector without the need for this high level of Government borrowing. In an international context, probably the most telling indicator of the propriety or otherwise of the Government's financial policy is the balance of payments. I have already indicated that despite this enormously high growth it will be approximately the same in absolute terms, £150 million, as it was on a much lower level of activity last year.

I know that the trade returns for November have been the subject of some unfavourable comment. It is always unwise to draw sweeping conclusions, favourable or unfavourable, from one month's figures but since the comment has fastened on these figures let us have a look at them. The import excess in November was slightly less than in the preceding ten months of the year. Actual imports in November were about 34 per cent higher than in November 1977. On the face of it, of course, this appears to be unwelcome, but the main factor responsible was a massive increase of almost 50 per cent in imports of producers' capital goods. No one could regard that as a disquieting development given that these imports will expand the productive base of the economy and help to generate exports and jobs in years to come. The November figures are consistent with the pattern over the rest of the year in that the fastest growing import category has been that of producers' capital goods, up by almost one-third on 1977.

I dealt at some length before with the reasons why Ireland is joining the EMS. I do not know if it is necessary for me to do it again but let me give three brief reasons. First, the new system is part of wider moves in the Community to raise the levels of production and employment. The growth of the world economy has been slow in recent years. There have been many reasons for this. However, one factor has undoubtedly been the instability in exchange rates. The sharp fluctuations which have occurred have been of serious difficulty to potential investors and to people doing business generally. The EMS is designed to reduce that inhibiting factor on growth.

Secondly, the EMS can help us to reduce even further the rate of price inflation. It will do this primarily by keeping down the cost of our imports. Thirdly, the EMS will strengthen the European Community. As a member of that Community this country should play its full part in such an important development. A stronger EEC cannot but be to Ireland's advantage. We have already gained substantial benefits since our entry to the EEC. I suggest that all of these items provide a formidable argument in favour of the Government's decision to join the system apart altogether from resource transfers. We will not, of course, obtain the benefits automatically. The price to be paid for the advantages is the greater disciplines that we as a nation will have to show in the way in which we manage our economic affairs. If these disciplines are forthcoming, and we make the necessary adjustment, there will be substantial medium-and long-term benefits for all of our people.

I am reverting now to the point I was making briefly at the beginning. Over the past few weeks we have had a number of debates on the EMS which I believe may well prove to be disastrous for the political fortunes of the Fine Gael Party. However, that is not my worry. I am not staying awake at night worrying over that, I can assure Deputies. The fact remains however, that intelligent observers abroad occasionally take note of the attitudes of the various strands of political opinion here on major issues. This is a major issue but, judging from the posturings we have had from the Opposition benches, it is quite evident that Fine Gael do not recognise it as such. Of course, they pay lip service to the gravity of the issue, but the postures they have adopted from the beginning have been so superficial that it would be impossible for anyone to take them seriously.

I do not know if the Fine Gael front bench appreciate this and the unhappy plight in which they place their party. Their supporters around the country are dismayed at the sorry showing of Fine Gael during this debate. The majority of those who support Fine Gael realised from the very beginning that the EMS was a major development, a development of immense significance for the future of our country. However, the Fine Gael Party in the Dáil lost a great opportunity by the way they proceeded on this issue. This was highlighted in the last few minutes of Deputy FitzGerald's speech where he wriggled in an effort to get himself off the hook that he and his supporters had got themselves on to. Let us have a look at the Fine Gael situation. It was not clear until the eleventh hour whether they were for or against membership of the EMS.

That is not so, as I made clear first thing this morning, but the Tánaiste was not here then.

First they proposed figures for resource transfers.

The Tánaiste is talking from ignorance which results from his not being here this morning.


Fine Gael had been putting forward at the beginning astronomically unrealistic figures for resource transfers. They were doing this despite the statistical and economic expertise that is supposed to be at their fingertips. However, their leading front bench spokesmen could not agree on what the transfers would be. Deputy Barry thought we should have sought ten times more than we sought, while Deputy FitzGerald thought we would need five times as much. But Deputy Ryan, rather more shrewdly, sought to avoid multiples but thought we required much more than we sought. This was an extraordinary performance from people who have had some experience of international negotiations. I do not know what would have happened if Deputy FitzGerald had been in Brussels and asked for £650 million a year but I have a fair idea. I think he would have been told in quite a few languages: "Go home. garsún, and learn your sums." Certainly, in such circumstances our application would have been treated with hilarity.

At least I am able to do my sums.

The Leader of Fine Gael compounded that superficial approach by wasting the time of the House telling us he did not know how to calculate the value of a moratorium. He told us that he had consulted five experts on the matter but that none of them knew how to calculate it either. I do not know who were these experts but I would not fancy their chances of getting jobs in any business in this country, although they might be welcome as economic advisers in the Fine Gael Parliamentary Party.

Seventeen of the questions we asked have not been answered.

Shopkeepers, for instance, would be able to tell the Deputy very quickly how to go about this calculation. The superficiality of the Fine Gael approach and the amount of time that was wasted on this type of nonsense, in so far as it is any way relevant, is a matter for calculation by people not on the floor of this House because this House should be concerned with policy——

Hear, hear. It is time that the Tánaiste began telling us about the policy.

What we have had is a series of superficial incidents—alleged confusion and so on—but why did we not hear about the importance of the EMS to the future of our people?

Why were we not told?

The people opposite were not able to get their dates right.

The Minister was not able to get his sums right.

All the wrong sums are on the other side. However, I gave the lecture last week.

The Minister differed from the Taoiseach.


It is important to refer once again to a subject that I regard as central to our whole discussion. No amount of assistance or of understanding from others in the EEC can make this country prosper. That is something only we can do. Membership of the EMS presents us with a number of problems. Nobody on this side of the House has tried to hide that, but the EMS presents us also with historic opportunities that were denied to those who went before us. It is for us to make the most of these opportunities. The prosperity and expectations of every worker and our hopes of providing jobs for our young people will depend on our sense of purpose, of discipline and of reality.

During the Adjournment Debate last week I said that we were entering a new year and a new era. It is clear that the importance of this historic watershed in our affairs is not realised in some quarters. The optimistic attempts to seize on the transitory problems associated with our entry to the EMS are both damaging and dangerous. We all know there are people outside the country who are delighted to have any opportunity to denigrate us. For instance, last Sunday in one of the British papers there appeared the headline "Up the creek in a punt". The mentality of those who write that kind of headline is conditioned to ridicule our people and our nation, to question our maturity and our ability to handle our affairs in the way that other small nations can handle theirs. The successful conclusion of the EMS negotiations and the widespread support we received from other member states came as a big disappointment to the kind of people who dream up these headlines. It is unfortunate that here at home there are unthinking people who, by taking hasty and precipitate action, hand ammunition on a plate to those who never miss an opportunity to tarnish this country's reputation. However, I hope we have come to the end of that attitude and that in the interest of all our people we can make the best of the opportunities offered by the EMS regardless of what we think of the package. We are in now. Let us make the best of it. If we are prepared to do this we will not regret it. In the hope that Deputies opposite will respond to that appeal I wish them a very happy Christmas.

The amendment we tabled has provided us with the opportunity to ask a total of 18 significant questions, but only one of these has been answered. However, at this point I am prepared to withdraw the amendment.

Amendment No. 1, by leave, withdrawn.

There is still before the House an amendment in the name of Deputy Cluskey.

Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá, 77; Níl, 13.

  • Ahern, Bertie.
  • Ahern, Kit.
  • Allen, Lorcan.
  • Andrews, Niall.
  • Aylward, Liam.
  • Barrett, Sylvester.
  • Brady, Gerard.
  • Brady, Vincent.
  • Briscoe, Ben.
  • Brosnan, Seán.
  • Browne, Seán.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Cogan, Barry.
  • Colley, George.
  • Collins, Gerard.
  • Conaghan, Hugh.
  • Connoily, Gerard.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Daly, Brendan.
  • Davern, Noel.
  • de Valera, Sile.
  • Doherty, Seán.
  • Farrell, Joe.
  • Faulkner, Pádraig.
  • Filgate, Eddie.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom (Dublin South-Central).
  • Fitzsimons, James N.
  • Flynn, Pádraig.
  • Fox, Christopher J.
  • French, Seán.
  • Gallagher, Dennis.
  • Gallagher, James.
  • Geoghegan-Quinn, Máire.
  • Gibbons, Jim.
  • Haughey, Charles J.
  • Herbert, Michael.
  • Hussey, Thomas.
  • Keegan, Seán.
  • Kenneally, William.
  • Killeen, Tim.
  • Killilea, Mark.
  • Lalor, Patrick J.
  • Lawlor, Liam.
  • Lemass, Eileen.
  • Lenihan, Brian.
  • Leonard, Jimmy.
  • Leonard, Tom.
  • Leyden, Terry.
  • Loughnane, William.
  • Lynch, Jack.
  • McCreevy, Charlie.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Morley, P. J.
  • Murphy, Ciarán P.
  • Nolan, Tom.
  • Noonan, Michael.
  • O'Connor, Timothy C.
  • O'Donoghue, Martin.
  • O'Hanlon, Rory.
  • O'Leary, John.
  • Power, Paddy.
  • Reynolds, Albert.
  • Smith, Michael.
  • Tunney, Jim.
  • Walsh, Joe.
  • Walsh, Seán.
  • Wilson, John P.
  • Woods, Michael J.
  • Wyse, Pearse.


  • Bermingham, Joseph.
  • Cluskey, Frank.
  • Corish, Brendan.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Horgan, John.
  • Kavanagh, Liam.
  • Murphy, Michael P.
  • O'Connell, John.
  • Pattison, Séamus.
  • Quinn, Ruairí.
  • Ryan, John J.
  • Tully, James.
Tellers: Tá, Deputies P. Lalor and Briscoe; Níl, Deputies B. Desmond and Horgan.
Question declared carried.
Amendment declared lost.
Motion agreed to.

I should like to take this opportunity to wish Members a happy Christmas and a peaceful New Year.

The Dáil adjourned at 5.20 p.m. until 2.30 p.m. on Wednesday, 31 January 1979.