Over the next eight to ten years the Government face the greatest challenge of any Government for many years, that is, the challenge of providing employment for the increasing number of young people seeking it. It has been estimated by NESC that by 1986, if present trends of economic growth continue, we will only create one-third of the jobs that will be necessary to provide employment. Assuming we create between 80,000 and 100,000 jobs between now and 1986, it will only be one-third of our requirements. It is an immense challenge and it is against that background that the policies and pronouncements of the Government must be judged. I believe that the policies pursued have been ill-timed and will result in the dissipation of our natural resources in order to achieve short-term gains which will not result in the creation of permanent jobs.
It can be clearly demonstrated that an increase in economic growth will not create jobs if the resources from that increase are not used in a judicious way to increase and multiply within the country. Unfortunately the macro-economic policies of the Government of excessive demand stimulation at a time of increasing propensity to import are such that valuable Irish resources are being used to create jobs not in Ireland but in France, Germany and other countries who are sending their exports into our markets. Economic growth alone is not enough. To demonstrate that one can compare the performance of the Irish economy with that of the German economy over the past ten years and see what exactly has happened on the ground in those two economies.
Some people might be surprised to learn that Ireland had a faster annual growth rate in production over the last ten years than Germany had. What has happened as a result of that? The annual rate of growth over the last ten years in the German economy has been 3½ per cent and the annual rate of growth in the Irish economy in the same period has been 3¾ per cent. We did better than they did. The key question to which every Government must address themselves is, how are the fruits of that economic growth, created by the work of the Irish people, being used? Are they being used in such a way as to generate more growth or in such a way as to spend and live now without making due provision for the future? Unfortunately, the latter course has been pursued by successive Governments. I do not believe that we have made good use of the fruits of our economic growth and this can be demonstrated. For instance, on average over the last ten years we have used our economic growth to run a balance of payments deficit of 3½ per cent of GNP whereas the Germans have a balance of payments surplus of 1 per cent. We have been borrowing 9 per cent of our GNP whereas the Germans have been borrowing only 3 per cent of theirs. The results of this policy in an open economy of spending more than you are taking in have been that the jobs that should have been created by our economic growth in Ireland are being created outside Ireland because we are sending the money that is generated in the country out of the country too quickly. That is partly as a result of the fact that we are a small open economy. Quite clearly the traditional Keynesian method of boosting employment by demand stimulation works much less well in a small open economy than it does in a large closed economy. We have been acting in our demand management policies as if we were a large closed economy when in fact we are a small open economy.
Our policy of generalised undifferentiated demand stimulation as a means of creating more jobs has been in direct contrast to what has been the deliberate policy of successive Governments over the years. The deliberate policy of all Governments has been to make our economy more, not less, open. We entered into the Anglo-Irish Free Trade Agreement originally and we subsequently entered into the European Economic Community.
The thrust of all of these policies has been to make our economy more open. If £1 is spent in an Irish shop it is now more likely as a result of deliberate Government policy of opening our economy that that £ or a larger share of it will end up in Germany, France or somewhere else. Policies of generalised demand stimulation as a means to create employment might have made sense in the fifties or sixties when we were not as open an economy as we are now. They do not make sense at present unless careful preparation has been entered into to make sure that the demand stimulation is of such a character that its results stay in the country and that we have prepared our economy to make full use of it.
The results of our pursuing the wrong type of policy and the Germans pursuing the right type is that they have derived far greater benefits in terms of real income increases from a lesser rate of actual production growth than we have over the last ten years. The fact is that while wages here over the last ten years rose at an average rate of 16 per cent per annum, wages in Germany rose by 9 per cent per annum. However, prices here rose at an average rate of 12 per cent per annum while prices in Germany rose by only 4½ per cent per annum. To sum this up, wages have risen in this country by less than twice as fast as in Germany whereas prices in this country have risen three times as fast as those in Germany. The result is that real income increases in this country have been considerably less than in Germany notwithstanding the fact that we have had a slightly higher rate of growth of GNP. The reason for that is that we have dissipated, by means of excessive generalised demand stimulation in our economy under successive Governments, the results of economic growth whereas the Germans have conserved within Germany, by responsible financial policies, the results of a lesser economic growth. The significance of this is that they are now better off than we are relative to what they were ten years ago although their economic rate of growth has been less than ours.
The Government have actually exaggerated the underlying errors that have been made by successive Governments in relation to economic policy. Rather than reversing errors that might have been made in the past they have exaggerated them. They have gone on what was described by the Minister for Economic Planning and Development as one of the biggest gambles in our nation's history which involved for a period of a year-and-a-half a policy of high borrowing, high demand stimulation and high imports. This has dissipated still further and to an ever greater extent the results of underlying economic growth.
The high stimulus which took place in 1977 and 1978 was seriously mistimed. It took place at the wrong time. This stimulus, which we cannot now undertake because we have not got the resurces as we are now over-borrowed, should not have taken place in 1977 or 1978 but should be taking place now. There are two major admissions in the White Paper which demonstrate the fact that the Government realise that the stimulation of the economy at that time was mistimed. They admit that the "Buy Irish" campaign has only had a limited impact on imports of consumer goods in 1978. They further state that the growing proportion of personal spending devoted to imports is one illustration of a trend which requires corrective action. They go on to say that perhaps the "Buy Irish" compaign will have a greater effect in 1979. If it is the case that a growing proportion of any money spent in this country is going on imports, surely that is the wrong time to start pumping in money. The proper approach for the Government would have been to have launched the "Buy Irish" campaign in 1977 and 1978 and have the demand stimulus when that campaign was well established and the Government were satisfied that the results of such a stimulus would, as a result of the "Buy Irish" campaign, stay in this country. What the Government did was launch the stimulus first and it is only now when that stimulus is over and the Government are telling us they will have to reduce their borrowing requirement, that the stimulus will have to be withdrawn, that it was a once-off effort, that they believe that the "Buy Irish" campaign might begin to have an effect. It is only when that is happening in 1979 that they believe that the "Buy Irish" campaign might begin to have an effect.
Surely the proper way would have been to do it the other way round—have the "Buy Irish" campaign first and then the stimulus. Instead, the demand stimulus which took place in 1977-8 was mistimed and did not have the results sought and led to a dissipation of our resources. I think this can be clearly demonstrated by reference to figures that are publicly available. We have at present a rate of inflation of 7, 8 or 9 per cent—in that general area. Yet, in 1978 over 1979 our trade deficit increased not by 10 or even 20 per cent but by 24 per cent. It increased by almost three times as much as the rate of depreciation of money here. That is not a healthy situation and it is a direct result of a mistimed demand stimulus which is causing jobs to be created in Birmingham, Germany and Japan with Irish money provided by Irish taxpayers. That worsening situation accelerated throughout 1978.
For instance in the last quarter of that year exports rose by 3.4 per cent but imports of finished consumer goods increased by 5.5 per cent, more than one-third again as much. Imports of producers' capital goods actually fell by 2 per cent. So we are running a deficit and, if it is for consumer goods to be directly consumed, that deficit is being used to a decreasing extent to finance capital goods for further production. In the last quarter imports of producers capital goods fell by 2 per cent while consumer goods went up by 5½ per cent.
I believe that one of the reasons why, with a slightly better rate of growth and annual production over the last ten years than Germany, Ireland has done very much worse than Germany was because of the demand policy of successive Governments—the stimulus in our economy was dissipated abroad through imports. A second reason is that we failed to take action, in the way the Germans have done with their great emphasis on competition and mobility within their economy, in the area of skilled shortages. We have a very high rate of unemployment and yet the Government admit that there are many jobs that cannot be filled because those with the skills to fill them are not available. If you create a demand stimulus without the possibility of increased employment, of people with the right qualifications coming along to take up the jobs made available by this demand, the result of the stimulus obviously will be more imports or an increase in wage rates or an increase in speculation without any increase in employment. The bottle-neck in the labour market here should have been identified before the demand stimulus took place. Because that did not happen the result is that, notwithstanding the very high rate of unemployment, the Economic and Social Research Institute can tell us that 20 per cent of firms' returns to them have said that they cannot expand production because of labour shortages.
The Government admit there are substantial shortages of skilled labour in certain categories of the building industry—bricklayers and so on. We should be told and the Government should inquire as to why these skilled shortages can take place. Are there artificial barriers to the training of more bricklayers, more people with the particular skills that are scarce in the building industry? Is AnCO free to provide extra courses and extra places on courses in these skills? Are people already with those skills and represented in the unions for their particular crafts in a position to tell AnCO not to train any more than a particular number in these skills because they do not want extra competition? If that is not the case the Government should say so, but, if it is, they should do something about it because it is quite unacceptable that artificial skill shortages should be maintained in our economy by anybody in a position to do so.
We also need to look at the overall manpower preparation input from all arms of Government. In my view there is insufficient co-ordination between the educational system, the industrial training authority, AnCO, and those concerned with finding jobs for those already unemployed in relation to the needs of the labour market. Obviously, in a free economy the Government can never control and never should control the labour market, the supply of particular skills, and people should be always free to go into a particular profession although that profession may be oversupplied, but the Government can and should control what it does with its own money. It should not be using its money, as is the case at present, to train doctors when we are producing almost twice as many doctors as there are jobs for doctors in the health services here. We are training doctors for the Canadian health services and the health services of other countries abroad. I think that is not an acceptable use of taxpayers' money. I am sure that is not an isolated example of what can happen when you have the educational system, particularly higher education, going in one direction, secondary education going in another, the IDA in another and the National Manpower Service in yet another direction. All these agencies concerned with the creation or provision of people with the skills necessary to take the jobs that our economy needs must be properly coordinated by the Government.
I am glad that the Minister for Economic Planning and Development is present because I know he is aware of the suggestion I am about to make. Something along the lines of the National Board for Science and Technology should be established to coordinate all manpower preparation and preparation of persons for the labour market by a system which would integrate with the budget for secondary education, higher education, AnCO, the National Manpower Service and whatever new agencies will be set up in this area. These could be knitted together in a non-coercive way through such an agency concerned in the manpower field.
The unique characteristic of the National Board for Science and Technology in my opinion—and I had some part in steering that Bill through this House—is not that it compels individual Departments to do certain things with their budget but that it ensures that the Government is presented with one coherent picture when making decisions about the allocation of resources between different Departments and can consciously plan as a result of an agency such as this presenting them with such a picture. I hesitate to urge any Government to set up yet another agency because we have too many of them at present—indeed many that are being set up are set up to police other agencies—and it is a sort of never-ending Parkinsonian process.
Something along the lines I have suggested would have a very valuable effect and in bringing the necessary discipline into the overall training and education system would ensure that it takes account of the needs of the labour market. It would avoid the situation where demand stimulus does not result in the creation of Irish jobs because it is used for imports and to stimulate demand for certain types of employment, when the people to fill the jobs are not available because the training is not being provided due to the structural mess-up, which a board such as I have indicated could over time—not immediately—unscramble. I will be interested in the response of the Minister for Economic Planning and Development when he replies to the debate.
I turn now to agriculture which is my own area of responsibility. A lot of people do not realise the potential of agriculture to contribute to the creation of employment and to the overall objective, which this country and all parties share, of providing extra jobs for the people who are going to come on the labour market. As I have said, with the present trend we are going to create only one-third of the needed jobs by 1986 for people coming on the labour market by that time. It has been estimated by the NESC that if present economic agricultural trends continue—and these have been quite favourable—4,000 extra jobs could be created by 1986 in processing or supply industries directly related to agriculture. That is not to be deprecated. But they also estimate that if the right policies are pursued and if high agricultural growth takes place, we could create as many as 22,000 as against 4,000 extra jobs in processing. In other words, 18,000 jobs in processing could result from the right agricultural policies, from new improved agricultural policies, whereas only 4,000 jobs would result if the present policy options in agriculture are continued in the present trends. When I say that 18,000 extra jobs could be created by the right policies in agriculture, I should mention that 10,000 of those could be created in the dairying sector.
Agriculture can make another contribution to the provision of jobs. First of all, there is the much neglected possibility of the creation of jobs in agriculture itself, on the farm. There is far too ready an acceptance by economic planners generally that it is not possible to create new jobs in agriculture. Obviously it is not possible to create over all an increase in the number of people employed in agriculture, but many of the people in agriculture are of an age which will mean that they will not be in agriculture anyway in ten or 15 years' time, and that reduction is going to take place anyway. But there is a very strong possibility of increasing what one might describe as the active labour force in agriculture. There should be in projection age differentiation and we should concentrate, not solely on the overall number employed in agriculture, but on the number who could be employed in agriculture in what might be described as the active age groups. I will not put a figure on it, but most people will know the age group to which I refer.
The Government should realise that there are possibilities in this field, and they should look at the Farm Modernisation Scheme with a view not only to increasing production but also to increasing employment. Some of the grants perhaps could be altered in such a way as to give an employment creation emphasis as well as a capital creation emphasis which seems to be almost exclusively the matter which is grant-aided in the scheme at the moment. Furthermore, if agriculture grows fast, fewer people will leave the land, and this means that there will be less competition for jobs outside agriculture with people seeking non-agricultural occupations.
Processing, increased jobs on the land and reduced prices on the land are three ways whereby agriculture can contribute directly to the national effort to create jobs for people who will be seeking them between now and 1986. All policy-making in relation to agriculture should take cognisance of these three facts. People working in an urban environment, and particularly the trade unions who sometimes perhaps are overstrident in their criticism of increases in agricultural income, should realise that they are interdependent with agriculture and that prosperous agriculture can make a direct and immediate contribution to creating and preserving jobs for their members. This interdependence must be stressed increasingly by all sectors of our economy if we are to go forward on a proper basis. In this country one person in five is employed in agriculture. Agriculture is far more important in our economy than it is in the economy of any other member of the EEC by a long shot. We should realise this when we are talking about unemployment and employment creation.
It is against that background that I feel bound to express my disappointment with the sections of the White Paper which deal with agriculture. Indeed, they make quite pessimistic reading. The Government say with some pride that a rate of growth in agricultural production of 9.4 per cent was achieved in 1977, a year for which both sides of this House can share responsibility. Without being unfair, one could say that the majority of the stimulus for the entire growth throughout that year was created prior to July 1977, but that is a matter about which one would not wish to cavil. A rate of growth of 9½ per cent was achieved in agricultural production in 1977. One would have expected that the Government would hope to be able to maintain the rate of growth in agriculture that they inherited from their predecessors, but no. In the White Paper the Government say that they project a gross increase in agricultural production in 1979 and 1980 of 4 per cent—less than half the rate of growth achieved in 1977 as a result of the agricultural policies of their predecessors. If one adjusts that growth target of 4 per cent to a net figure, the Government are talking about an increase of only 3.3 per cent net agricultural product in 1979 and in 1980. That is a very pessimistic start to agricultural policy-making.
Furthermore, the global targets of 4 per cent a year for two years are not much use for economic planning to those engaged in agriculture in semi-State bodies and on the farm, wishing to see what the Government's view and intentions are, and making their own plans accordingly. A lot of people forget the purpose of economic planning. It is action by the Government to create a climate of certainty in which people can invest and take their own independent decisions, knowing what the Government are doing and what they intend. Merely setting a global target of 4 per cent in agriculture is no help to practical decision-making on the farm, in the factory or in the boardroom of a semi-State company concerned with agriculture. What would have been useful would have been sectoral targets for milk, beef, sheep and grain. If individual targets were set for the individual sectors then the people in Bord Gráin would know what to expect in their sector, and the people in the CBF would know what to expect in their sector, and likewise farmers engaged in other lines of production. Telling them that overall agricultural growth is going to increase by 4 per cent tells them really nothing. It is of interest to economists who are interested in comparing one paper with another and engaging in learned discussions about economic models and input and output. It is of no use whatever to practical men making practical decisions on the farm, in the factory or in the board room.
So far as economic planning is concerned, I believe that the targets set by the present Government are very weak and remiss indeed. I do not think in any real sense one can describe this White Paper as an economic plan at all because of the lack of precision in the economic projections in individual sectors of the economy. Certainly this plan would not be accepted in France as an economic plan within the concept of economic planning they have there, and it is a country with a free economy. In France the plans and targets are drawn up in immense detail. They are prepared in draft and consultations take place in depth with each sector of the economy. Then finally a target is produced that has been agreed with various sectors. That has not happened in this country.
I do not believe one can say that economic planning has taken place here under this Government at all, though I readily concede it did not take place under the previous Government. But the previous Government were honest about it. They said they were not engaging in economic planning. They said they believed that things were changing too fast for economic planning to take place. They may have been wrong but at least that is what they said and they were honest about it. But the present Government were telling the people that they were going to introduce economic planning and that this was one of the major ways in which they would create employment here. That is what they told the people before the election. Not only were they going to create jobs, not only would they engage in getting rid of car tax and do all sorts of other wonderful things, but they were going to engage in economic planning as well to make sure that that money was properly used. Quite clearly this is not an economic plan because its targets are so global as to be of little value to anybody.
There is another failing in relation specifically to agricultural targets in the White Paper: the targets are not broken down on a county by county basis. I believe that there should be county development teams set up in relation to agriculture in each county, that all the agencies—the ACC, the county committees of agriculture, processing industries and so on involved in a particular county—should be amalgamated into a team and that they should set targets for their own county. The fact is that there have been immense differences in the rate of agricultural progress in different parts of the country. To give an example of this, over the last five years, which have been five very good years for agriculture, production on the farm in the west and north-west has increased by only one-third the rate of other parts of the country. A realisation of that fact is not reflected in the White Paper, nor are there any measures proposed in the White Paper—there are some but not conscious measures—designed to eliminate that imbalance. Furthermore, as between farmers the results of economic progress have been unevenly distributed. There are some farmers whose incomes have shot ahead. But it should be remembered that one farmer in every ten—and I am speaking now about full-time farmers—had an income in 1978 below £1,000 a year. One farmer in every ten, a full-time farmer, perhaps with a family, was earning less than £1,000 a year and the proportion of farmers earning less than £1,000 a year in 1978 as against 1977 did not reduce, even though the proportion of farmers earning more than £3,000 a year in 1978 as against 1977 increased dramatically. Therefore, the results of progress are not being shared equally between farmers.
The Government must take conscious action to deal with that. What are they doing? They are proposing to remove the one means that one in ten full-time farmers has of making ends meet, namely, unemployment assistance, unless he is prepared to make a full declaration of his income. This is what, it appears, is going to come in the budget. That may sound very fair, but the fact is that these men probably are not prepared to make a full declaration of income because of the conservative positions they have about making any declaration of what they earn, their fear of inspectors, of Government and of anybody interfering with them.
We were told also that, to compensate for the removal of unemployment assistance or the reduction in its availability, improvements would be made in the disadvantaged areas scheme, and that these two schemes were interdependent. I ask then: why has the amount of money for the disadvantaged areas scheme in this year's Estimates been increased by 1.3 per cent only while the overall rate of increase in the budget for agriculture has been 9 per cent? This seems to indicate that not only are they cutting unemployment assistance but they are also cutting relatively on the disadvantaged areas scheme as well, which was supposed to be the scheme to be used to compensate.
Furthermore, I believe that the western drainage proposals will be used only to save money for the Irish Exchequer and that there will be no acceleration in actual drainage overall. There can be no assurance that that will not be the case unless the Government are prepared to account separately for EEC arterial drainage from money spent on drainage otherwise. There has been a serious underspending under the heading of arterial drainage in the Capital Budget of 1978. One million pounds voted by this House in 1978 for arterial drainage was not spent. Almost 30 per cent of the total sum voted in 1978 for arterial drainage was, because of inefficiency in the Board of Works, not spent. That is not a good platform from which to be launching what we are told is an EEC-aided accelerated arterial drainage programme.
I should like to refer also to the run-down in our beef herd. The beef cow herd in this country is now almost half what it was in 1974—in other words, the number of calves being produced for beef production is being rapidly reduced. I believe we should apply now for EEC aid for a calved heifer subsidy scheme to reverse that dangerous trend that will affect employment in the meat processing industry directly in coming years. I believe that EEC aid would be available on the grounds that it would be a diversion from milk production. The Government make no mention in their White Paper of making any application for this even though it is believed that the French Government will have it brought about anyway. It looks as if the Government will again be travelling on the coat tails of the French, just as they did in relation to western drainage, just as they did also in relation to the structural grants for the west of Ireland. They will be travelling along on the coat tails of the French and Italians. The French and Italians will get it. A year later the Irish Government will come up with the same scheme and pretend they got it all on their own efforts when in fact they got it only because of the efforts of other Ministers in other countries with different problems.
We are told also in relation to the beef industry that the role of the CBF— Córas Beostoic agus Feola Teo.—is to be expanded. Why then has the budget for CBF been increased by only 5 per cent when the overall budget for the Department of Agriculture has been increased by twice that amount? That does not look like an expanded role for the CBF; it looks like a reduced role. We are told also that the expected reduced slaughterings in meat plants could be offset by a shift to higher value-added forms of production within the meat plants. Why then has the marketing incentive scheme proposed by the National Economic and Social Council, which would have done precisely that, which would have led to increased value added, not been adopted? Why have the Government completely ignored that scheme in the White Paper? A serious proposal from the National Economic and Social Council, which would have had a direct effect in increasing employment in the meat processing industry, has not alone been rejected but has been ignored in the White Paper. I ask the Government to address themselves to that when they come round to their next paper, whatever colour that may be.
We have already had signs of a mini-budget for agriculture before any budget has been announced. The Estimates provide for £10 million extra to be collected in appropriations-in-aid from agriculture; presumably this is in respect of fees. We have already had the Government taking £2.3 million away from agriculture by the removal of the lime fertiliser transport subsidy. That will increase the price of lime by £1 per ton.
We have had no action on land purchase or reform. No extra money has been provided for the Land Commission this year for land purchase. The amount being provided for purchases under the farm retirement scheme has been reduced by 20 per cent and the amount for annuities under the same scheme has been reduced by 3½ per cent. In other words, the Government are opting out of the land market. They are washing their hands completely. They do not mind now who buys land. They are just standing back; they are not providing the Land Commission with the money to enable the Land Commission to intervene and maintain some sort of discipline and order in the land market. The Government, for economic and financial reasons, have opted out of the land market. They are not providing the Land Commission with the money to exercise their powers to do anything about it. They are not putting anything in its place. It is a very serious situation which generations of farmers in the years to come will regret.
