Dáil Éireann debate -
Thursday, 15 Feb 1979

Vol. 311 No. 8

Financial Resolutions, 1979. - Financial Resolution No. 8: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Economic Planning and Development).

Mr. L. Lawlor

When we concluded business yesterday I was talking about the alternatives the Government had in preparing financial strategy in the 1979 Budget. They had the option of being optimistic or pessimistic in what they hoped to achieve and the Government have rightly set ambitious targets in regard to a reduction in inflation and the creation of income benefits to the less fortunate and to the wage earners and other members of society who are dependent on Government financial strategy.

There were several options, and the Government have opted for a faster growth in the area of constructive creative employment. For the first time in the history of the State, 60 per cent of Government finance is being directed towards infrastructure, schools, health facilities and other developments which were termed recently in the magazine associated with the construction industry as the creation of real national wealth.

Opposition criticism of the detailed submissions in the budget cannot stand up to scrutiny. The opposition have not proposed an alternative strategy which would be constructive. Senior members of the Opposition parties have criticised AnCO and the Minister for Labour regarding the work experience programmes for young people. Deputy FitzGerald referred to "cosmetic" jobs. He regularly quotes OECD reports, but if one examines their most recent publication one finds that all our EEC partners have seen fit to invest Government funds in this direction. There is an opportunity for young people to gain experience.

During the first two or three years of the working life of teenagers, it is impossible to expect them to accept positions of responsibility, and organisations which employ them must invest in their training. The Government have decided to devote considerable sums in this direction. Employers in my own constituency regard this policy as useful and constructive. Very often young people succeed in obtaining permanent employment with the organisations who have been responsible for training them.

I now refer to the farming community and the way in which the budget will affect them when the political point-scoring about the 2 per cent levy has finished. The farming community have gained a new place in society because of their ability to produce and the rise in the export of their products. They have invested a tremendous amount of capital in their farms. At the commencement of 1979 we are in a situation in which the Government have decided to recognise the contribution they have been making, having left them the opportunity to reinvest the profits they were making and, through this 2 per cent levy, seek some funds which would be re-invested directly in their activities. The 2 per cent levy needs to be clearly spelled out. Under EEC regulations it has not figured in the tax situation at all. The fact that it is a levy means that it must be directly re-invested in farming. When one hears the President of the Irish Farmers' Association on radio asking that the Government should treat farming similarly to the manufacturing industry, as he was heard on radio last Sunday, one must point out that we on this side of the House quickly recognised that situation and, I should have thought, have already dealt with that matter. On resumption of office we decided that the farmers' own businesses, the co-operatives, should not be taxed on their profits but rather should feed those funds back to their members for the development of co-operative activities by way of investment in plant and better services for farmers generally.

I represent a constituency which has a farming content of approximately one-third, the balance being compiled of urban dwellers. While the farmers in my constituency probably are not those farmers about whom most concern has been expressed I should have assumed that the approach to the 2 per cent levy by anybody in the farming community would have been that of seeing it as an incentive to get on with producing more. In that way one reduces the percentage one has to pay, notwithstanding the fact that 2 per cent is a very small figure. The Minister for Finance was very careful in the framing of the 2 per cent levy to ensure that it applied only at the end of the scale.

This matter has been raised by many members of the farming community. It has been raised at a number of meetings and I am sure my colleagues from country constituencies have been asked for more detail by greater numbers of farmers. When one reads the small print of this levy one finds that the small farmers who came to Dublin to parade and protest would not have been affected at all. The levy would apply rather to the large farmers, those handling cattle at the latter end of the scale and sending them into meat factories. Hopefully this 2 per cent levy would be recovered from the people who benefited from large exports of Irish products. In other words, it was intended that that 2 per cent levy would be recovered from abroad on exports because that is where the vast bulk of farmers' products end up, on export markets. It is fair also to say that it is likely to end up on the housewife's shopping bill, or at least a certain proportion thereof. Therefore it appears that there has been somewhat of a misrepresentation of this 2 per cent levy by Opposition spokesmen.

Any sector of the community, and particularly the small farmers, could readily expect that they would receive a sympathetic reception from any Fianna Fáil Minister for Finance. It is their task and always has been to put facts and figures before the Minister for Finance showing that there should not be hardship inflicted on a particular sector. Tomorrow there will be a group of pig producers coming to meet the Minister for Finance to state their case, to convince the officials in the Department of Finance that the margins within which they are working are so narrow that the 2 per cent levy would constitute hardship. If they can prove their case and equally if any other sector—farmers or otherwise—can present facts and figures to the Minister for Finance showing that the implementation of this measure will constitute hardship, losses, a downturn in investment and so on, their case will be heard. In coming weeks and months if those people who feel they have a grievance are able to substantiate it with facts and figures I have no doubt that the Minister for Finance will be sympathetic and take the correct decision.

When dealing with the farming community and their spin-off industries one must point out that, in spite of the tremendous amount of investment therein, unfortunately farming and food processing have not, as yet, delivered on the anticipated number of jobs. It is not an instant success situation but we never expected it would be. However, a situation obtains in which the farming organisations, the farmers and their most important industry, meat processing, in this year face a downturn in throughput because of lack of cattle numbers. That needs to be identified. We should trace the source of that problem so that we never allow a repetition of the situation in which Government funds are directed into the meat processing industry.

We now have the facilities for such processing, but we do not have the product. We have the land; we have everything bar the product. That stems from the Coalition's period in office. Unfortunately, here I must be critical of my constituency colleague, the former Minister for Agriculture, in the 1973-74-75 period when our farmers, particularly those small farmers about whom the Opposition are now so concerned, were crying out for some form of practical help by way of feed vouchers. But a period of some 18 months elapsed before the problem was even recognised. That resulted in the greatest plundering of the available cattle in this country. In my own constituency one of the largest meat processing companies had to slaughter numerous cows from the cow herd. We had a tremendous mountain of dead calves, a product which we now need badly in our meat processing industry. As a consequence there are a number of meat processing factories working on three-day weeks. We do not have the cattle for them and that is a consequence of that period to which I have adverted. We must now commence increasing our cattle numbers in an endeavour to revert to the situation that obtained before those catastrophic events. This has serious consequences for our earning capacity abroad because our meat and other farming exports constitute a total benefit without any great import content. I would suggest that that is nil.

All of these consequences mean that our greatest earner of funds has been depleted. It is our duty, that of the farmers and of all the organisations concerned, to build up those stocks again, to have the beef processing industry reimbursing Government funding and farmers' money in the co-operative movement, thereby justifying the capital invested, although it has been predicted that we will not get that return because of the previous disastrous period.

I have been only a short time a Member of this House and probably I should not be critical of the Leader of the Opposition party, but it is pitiful that in his contribution to the budget debate he had to revert to 1969 to cite farmers' incomes. That does not make sense when one bears in mind that we have available to us the farm management surveys of 1975 to 1977 detailing farmers' incomes right across the board and taking into account sizes of holdings. It is totally misleading and most unconstructive of Deputy Garret FitzGerald to revert to the late 1960s, prior to our entry into the EEC, prior to the receipt of all the benefits which have accrued to the farming community.

It is misleading to cite incomes of small farmers in remote parts of Ireland and to say this 2 per cent levy affects them primarily. The 2 per cent levy has got more than its fair share of publicity. It is now being looked at in detail. Nobody can criticise the 2 per cent levy at the meat factory stage of the process or on the grain farmer. Possibly beef farmers may have a valid case and this will be dealt with in the coming weeks and months. There is definitely an incentive for the farming community to increase their numbers to pay for this levy and the money accruing from it will go directly to improve the services.

We defend the levy on the basis that the funds accruing from it will be ploughed back into the services, but we have heard complaints that the services are not adequate. This is a matter for the Minister for Finance. It is of particular concern for the local farming community, their representatives in the Dáil and the local advisers and other people implementing those services. If somebody is not providing a service it is no use complaining about it; one must do something constructive. One must come forward to the elected representatives and offer constructive suggestions as to how services can be improved. It is not a valid argument to criticise the levy on the basis that the funds going back into the services are not adequate. If they are not adequate they must be made adequate, but one must substantiate that criticism before it can be accepted.

I will refer now to the National Economic and Social Council's document which is available to Deputies this morning. It deals with productivity and management. This document will require a lot of attention from management. One can quite easily draw conclusions, work out figures and discover that our output and productivity per employee is considerably lower than that of our EEC colleagues. This puts our exports into a situation of costing more because our unit production costs are going to be in excess of those of our EEC colleagues. When we are competing with them we are at a disadvantage. I would therefore like to talk for a few moments about management and its role.

A situation has arisen in many areas where the trade union movement and the employees all the time appear to be the root cause of disputes. Industrial relations is a complex matter needing a lot of attention and probably a lot of improvement. The key area of industrial relations starts with management. This report this morning goes into great detail on the attitude of management towards production, towards co-operation with the employees in an organisation and their ideas on how improvements can be forthcoming. The report says that management in certain situations realise that there is a low output and accept defeat. They do not make any real effort to redress the situation or to improve what is an unacceptable output.

Following on this report therefore hopefully we are going to have a very hard look, on the management level, at our private operations, our semi-State bodies and the public sector. We will try to find out how they can increase their output and how that can be done with the co-operation of the employees. It is definitely a challenge which will require man hours outside normal working activities in order to draw up what would be a suitable scheme. It will require a lot of discussion with other members in their organisations. But it is going to have to be tackled and we now have practical evidence from the NESC that there is a need to devote attention to this matter.

The Taoiseach in his budget speech last week highlighted the fact that people other than those in the organised trade union movements pay PAYE. It should go out from this House that the PAYE contribution to the Exchequer in 1978 was of the order of £526 million and was a 15.7 per cent contribution to central funds. I wish to look briefly at the main contributors of that amount of money. Literally every managing director, executive and so on is paying his fair proportion and a high percentage of PAYE is based on their salaries. Therefore, when the trade union movement cite this figure they should also, in fairness, give due recognition to the non-organised members of the PAYE sector.

It is also necessary for contributors, whether they are in the PAYE sector or in other sectors, to recognise that it is the Government's task and duty to provide the essential services. To do this they must strike a balance. They must also identify, in our present circumstances, how best to use the surplus from tax plus whatever intelligent borrowings can be made.

In this budget the Minister for Finance and the Cabinet have taken the right course. They have lived up to their commitment to reduce Government borrowing from 13 per cent to about 10 per cent. The reason for that reduction in 1979 is very obvious. That figure was justified in 1978 because we got the desired results—we fuelled the economy and we achieved our job targets. Now we are depending on many sectors of the community who have had the benefit of the fuelling that the Government provided in 1978.

We are also constructively budgeting for 25,000 new jobs in 1979. That is one of the prime targets which all sectors of this community should work towards, because if we are successful in that task we will have 25,000 more participants in employment contributing to central funds in 1979. This will allow the Government in 1980 to give additional relief to people and have funds available for further investment and for alleviating poverty within our society.

We had to decide on a particular course. We cannot be everything to everybody in the financial year 1979. We therefore opted for the job creation drive. We are not going to be deflected from that policy irrespective of any criticism that may be forthcoming, because we believe that it is the right policy and we believe we have the support of the people in bringing about an end to unemployment by 1981-82. That is optimistic, but there is not any point in going for middle of the road targets. The Central Bank and other economic commentators have described us as ambitious, and Opposition spokesmen have told us we are 5 per cent in arrears in regard to our inflation forecasts.

However, as a responsible Government if we do not endeavour to achieve these targets how will we create new jobs? We have put before Dáil Éireann and the people the targets we set, beginning in the Green Paper, through to the White Paper. We have put before the people a practical plan. It worked in 1978 and we will see to it that it will work in 1979. That is our task as a responsible Government; it is a responsibility we took when we assumed office and we will not be deflected from it.

We have not had from the Opposition any constructive proposals in regard to Government financing. If they are to reserve consideration they must put to us a better way of handling the State's finance. Meanwhile we are engaged in re-creating the open type Government which was so successful in the 1960s. It is only right and proper that we should put before all sections of the community targets which are practical and achievable. We have put before the organised trade unions suggestions for low income increases in 1979 and we have told them why such increases should be agreed to. We have asked them to play their part in helping the Government to attain their targets, aimed most importantly at keeping inflation down. Trade unions have a responsible and constructive role to play in helping to organise the State's affairs. They represent large numbers of key personnel.

As I have said, it is the Government's duty to propose and to seek to implement responsible action, and all sections of the community must support such action when it is based on practical propositions. We hope this support will be forthcoming. We are quietly optimistic that the trade unions will realise the role the Government are playing. I listened to Mr. John Carroll on the radio last Sunday and in that background I hope our trade unions will be influenced by the difficulties across the water where there has been such an aggressive trade union approach to wage increase percentages which will not benefit themselves or the community. We must all realise that very often the people who suffer most from industrial disputes are the less well off in the community. If the trade unions realise this and keep their income claims at a realistic level they will be helping to pin down inflation for the third year and at the same time they will be increasing our standard of living. Inflation is one problem which will keep down the economic value of any income increases.

Speaking from the back benches of the Government side I earnestly urge the unions and the farmers to examine in detail the Government's programme and to bring any problems they have to the attention of respective Ministers. If they examine our targets and our proposals they will find that they are correct and worthy of their wholehearted support.

Mr. M.P. Murphy

The financial proposals before us can be said to be the second this year because we have had already this year the unusual feature of a piecemeal budget, although the year is not very old. I refer to the abolition of the food subsidies a short time before the introduction of the budget. I should like to know what the idea was. I am sure the Minister for Finance thought that by dividing his proposals and removing the question of food subsidies from his budgetary statement, the abolition of subsidies would pass unnoticed.

The abolition of the food subsidies meant a saving of £20 million to the Minister, a sizeable sum of money. My main reason for mentioning the food subsidies is because when Deputy Colley was an Opposition spokesman he referred continuously to the fact that milk and butter and dairy produce generally were in over supply in the Common Market and that they had to be sold into intervention. He therefore suggested that they should be subsidised here to enable our people to buy them at prices below the normal rate. The Government at the time introduced the subsidies, and Deputy Colley had been less than 18 months in office when he removed those subsidies, saving the Exchequer more than £20 million.

An innovation in this year's budget is the farm levy, to which I am vehemently opposed. There is not any justification for it. As has been pointed out by the many spokesmen who have expressed opposition to it, it places a tax on many farmers who, because of their economic circumstances, would not have been liable to income tax. This move was a device by the Minister to get at such people, who are in a majority among the farming community. I live 230 miles from Dublin and last Tuesday many farmers who live further away were here at Leinster House voicing their opposition to the agricultural levy. Much credit is due to the farmers for travelling the long journey to voice their opposition to this proposed levy, but, judging from press reports today regarding what transpired yesterday at the Fianna Fáil Parliamentary Party meeting, the journey may have some effect. The only effect that will be satisfactory is for the Government to forget about this levy and for the Minister for Finance and the Minister for Economic Planning and Development to admit that they made a blunder. It would be well for them to make that admission now rather than to continue fighting the issue on the shaky grounds on which they supported the proposal.

A figure of 2 per cent seems small but many of us here will recall the time when turnover tax was introduced at 2½ per cent and when we were told that tax at this level would not have much impact on anybody's income. At the time that tax was expected to bring in about £13 million, which was money needed to help the administration of the State. We were more or less assured that the level would not change but everybody knows what happened. That system of taxation was changed eventually to the VAT system and we all know that there is no such rate of VAT today as 2½ per cent. The minimum figure is 10 per cent but there is a maximum figure of 40 per cent. If the proposed 2 per cent levy were to be imposed on farmers we could expect the figure to be increased, too, before long. We are told that the proposed increase in the current year would bring in about £16 million. That would be for the nine months period from April and we are told that the revenue would be ploughed back into the development of agriculture. If the Government go ahead with this levy it is possible that the figure would be increased to as much as 10 per cent as happened in the case of VAT.

There was a great furore among the then Opposition when the National Coalition proposed the introduction of a system of taxation for farmers whose valuations were more than £100. We were told that such a tax would slow down development in agriculture and that it would have a serious impact on our agricultural exports. In addition we were given various other reasons for not going ahead with the tax by the man who is now Minister for Agriculture. It was the opinion of the Coalition that everybody, regardless of his vocation or profession, should be obliged, if his income so warranted it, to make his contribution to the Exchequer by way of income tax. Subsequently, the valuation at which tax would become payable was reduced to £75 and we gave farmers the opportunity of availing of the notional system of taxation. We accepted the argument that it would be difficult for many farmers to submit factual returns since many of them did not keep accounts. We were aware that many farmers did not operate their farming business in the same way as commercial interests would operate. In order to give them an opportunity of becoming accustomed to an accountancy system we gave them the option of the notional system and accepted that a £65 per £ land valuation was a reasonable assessment of income. On that basis a farmer with a valuation of £100 would be deemed to have an income of £6,500.

Let us consider the position today. Since Fianna Fáil were returned to office that assessment would be now about £12,500 or almost a 100 per cent increase. The £75 figure has disappeared. We moved down to £60 last year and it is now £50. I expect it will be £40 next year. As well as that, the Government have abolished the agricultural rate rebate. There is now no primary agricultural grant for such farmers. This is a major saving to the State. Not alone has the multiplier been increased and evaluations reduced from £75 to £55 but they are being taxed on what they sell—milk, oats, barley, wheat, cattle and so on.

The previous speaker said small farmers need not worry, that they do not have to pay tax at all. I do not know how he came to such a conclusion. There are many farmers who hold on to cattle for a period of three years in order to make money to provide for their families. They care for the cattle and provide them with feeding stuffs. Very often the feeding stuffs must be bought from the shop and everybody knows the cost of them today. He sells the cattle at the mart. The purchaser then will add in his transport costs and his profit and will sell either on the home or export market. It is on the price the purchaser gets that the 2 per cent will be levied. Consequently, in assessing the value of animals the purchaser must deduct 2 per cent from their value—the amount he has to pay in tax—otherwise he would be at a loss. This budgetary proposal also assumes that the creameries will return 2 per cent of the value of the milk from each supplier.

Mention has been made of pigs. Pigs have disappeared to a large extent from small farms. In south-west Cork, one of the best pig rearing areas, we now find that only large units survive because it was not economical for small units to continue. The profit margin from sows, bonhams and pigs has always been narrow. I am conversant with pig production and pig rearing and there was always uncertainty in it. The 2 per cent imposition is not justifiable. The same can be said as regards the production of meat or grain.

Farmers who have a valuation of more than £50 must now pay income tax. On top of that they must pay this special levy tax, which this year is 2 per cent. What will it be in future years? I disagree entirely with this tax. I support the farmers who travelled to the Department of Agriculture during the week. I support the organisations who are opposed to this tax. I was surprised to read in this morning's paper that the Taoiseach disciplined a member of his party for voicing his opinion on the tax. This was to be expected because Fianna Fáil now think that, with their 84 seats in Dáil Éireann, they can walk over the people and ignore some of the assurances they gave at the election, particularly about being helpful to the farming community. I know that you, Sir, know better but you must be a "yes man" in the Government party.

I would like to deal with one item that has so far not been referred to in the debate. We now borrow around £800 million a year, mostly from abroad. I remember a time in the fifties when we borrowed at home. The usual line was that in the month of October or November an Exchequer, ESB or CIE loan would be floated. We had a statement from the Taoiseach of the time stating that it was advisable to give all possible support to the loan and that any citizen who had money to invest should invest it in the loan. That was followed by pleas from the Opposition. There was always unanimity in the House that the loans, which were usually for £20 or £30 millions, should be supported. The press usually added their weight in asking for support also. As a result many people with limited savings invested in such Government loans in the 1950s and 1960s. Some of them had to sell at a considerable loss. Their money more or less disappeared. It could be termed the Wall Street crash——

Minister of State at the Department of Posts and Telegraphs (Mr. T.J. Fitzpatrick)

(Dublin South-Central): That was because the Coalition let inflation get out of hand.

Mr. M.P. Murphy

Fianna Fáil were in office for most of the time.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The Minister of State should look after the telephones. He will be kept very busy if he does that.

Mr. M.P. Murphy

The Minister has a big job to do in looking after the telephones and the postal services generally considering the state they are in.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Previously we were told to post early but now we are told not to post at all.

Mr. M.P. Murphy

In anticipation of retirement a number of people invested their savings at 4¼ per cent and at 6 per cent. Now the nominal capital has dwindled by about 40 per cent and, of course, there is no comparison in value. The original £100 invested is worth only about £2.50 now. These people should be given some assistance. Many of them told me that when they invested they hoped that the income from the investment, together with their pensions, would help them in the winter of their lives. It was a bad investment; in fact, it could not have been worse. The people concerned accepted the advice of the State when it needed help. A sum of £1 million was worth much more then than it is now. To make matters worse, the original investors have to pay income tax on their dividends.

I am making a distinction between the original investors and later investors. Many of the original investors hoped for an improvement in the market and did not sell. I accept that this is a complex problem, but it should be considered. Many of the original investors, having accepted the advice given in this House, now find that their money is gone. Any other kind of investment would have been much better. I should like to focus attention on the plight of such people.

We were told that 25,000 jobs were created last year. I do not agree with that number. I cannot see any jobs created in south-west Cork other than normal replacements, but I can see people leaving Ireland again. It is now accepted that since Fianna Fáil returned to office in July 1977 more than 14,000 people have emigrated annually. There was a statement from the Director of Catholic Chaplains in England, an Irish priest, describing the plight of many emigrants, particularly young boys and girls. They had to go to Britain because they could not get work here. This did not happen five or ten years ago—it happened last year. These young people cannot find work in England and have nobody to look after them and, according to the Director of Catholic Chaplains, unfortunately many of them get into trouble.

If there is a reduction in the unemployment figures we must take into account that emigration has started again. As soon as Fianna Fáil came along emigration came with them. During the four years of the National Coalition Government there was little or no emigration, despite the oil crisis that upset the economies of many countries. All of us want to see jobs created. We have been told by the Government that 25,000 jobs were created last year and that the same number will be created this year, apart from jobs in the public sector. It is doubtful if some of the jobs will be productive. Non-productive jobs are of little use in the development or advancement of a country. I cannot see any jobs being created in the area I represent.

The previous speaker referred to turmoil. There are strikes every day; indeed, it would be most unusual to open a morning paper without reading of a strike some place or other. I think the Government are responsible to a large extent because during the 1977 election campaign they announced that people would not have to pay rates or car tax and that their remuneration would be increased without difficulty. Now people are finding that with the almost daily increases in the prices of commodities they cannot live on their present incomes. Hence they are looking for increases; and we know how difficult it is for the private and public sectors to provide such increases. In any case, Fianna Fáil's industrial relations system is falling down on the job. That it is a very poor system is evident from the number of days lost in strikes. Many times I have put formally before the House suggestions for settling such matters and I am not going to repeat them now. It would be completely out of place to be repeating something that has gone unheeded for so long.

The sight of my colleague, Deputy O'Donnell, reminds me of the question of housing. We read that there is to be a big development in the islands. I represent a number of those islands and I have pleaded here and everywhere that we should get more money for the people who live there under many disadvantages and who should get a bigger slice of the cake than they are getting. I pleaded for a milk subsidy, which was granted and was very much appreciated, but unfortunately it has never been increased.

I was reminded of when Deputy O'Donnell was Minister for the Gaeltacht and TDs from the constituency in which Cape Clear island is approached him seeking a subsidy to build three houses there. He generously granted a subsidy of some £8,000 towards the cost of the three houses. It was a small figure. Deputy O'Donnell lost his ministry at the 1977 General Election, that £8,000 was never paid, and we had to take it out of our ordinary housing budget. Maybe Deputy O'Donnell does not know that the Department of the Gaeltacht never paid that money. That is an indication of how the Department of the Gaeltacht helped Cape Clear. Now the people there have got their money, but we had to give it to them from the amount which we got from the Department of the Environment. The value of the sum allocated for housing is very much reduced in relation to the cost of building houses at present.

Still in relation to housing, I have stressed at all times that as far as possible people should provide their own homes, if their income is adequate to allow them to do so, and should not be waiting for the local authority to provide houses for them. Now it is nearly impossible for people to buy houses. Local authority loans are the type usually availed of in my part of the country and in rural Ireland generally. To qualify for such a loan you must have an income of less than £3,500, and if you are married and your wife is working the combined income must be less than £3,500, and the maximum loan granted is £9,000. This amount represents at most only two-thirds of the cost of a site and the cheapest kind of house that you could possibly hope to have built. In fact the day when you could buy a site and build a house on it for £15,000 is gone now and the price at present is likely to be about £18,000.

Mr. O'Donnell

It would be £20,000 now.

Mr. M.P. Murphy

It would, because the figure we got for building council houses on developed sites was £14,000. How do the Minister for Finance and his Government expect that a man with an income of less than £3,500 can avail of a loan of 60 per cent of the cost of a house and pay pack £97 monthly over a period of 30 years? That monthly repayment is a huge amount for a man with an income of less than £3,500, and if his income is higher than that he will not get the loan. The repayment of £96.89, or effectively £97, means £23 a week and it is impossible for people with low incomes to meet it. Therefore, they have to try to get the local authorities to provide them with houses. I am making a plea here that we subsidise interest rates and loans for the benefit of such people. Cork County Council have increased the interest rate now by 1 per cent and I assume that all local authorities have done likewise. We are now satisfied beyond reasonable doubt, as is said in court, that these people cannot pay that kind of interest and avail of these loans. I suppose the same situation applies in regard to building societies where the repayments are of a similar nature. While the inflationary trend continues there is an obligation on us to subsidise to some extent the interest on such loans. It is as economic to do this as it is to provide houses under local authority schemes.

I refer now to the increases in the prices of drink and tobacco. On the day of the budget statement I opposed those increases. People who smoke and take a drink are already contributing more than their share to the Exchequer, and this budget provides for an addition to the taxes they are already paying. According to the Minister, 28.5p is the duty on 20 cigarettes. Therefore, a man going into a shop and buying 20 cigarettes at 50p or so is paying 28.5p, or well over half the purchase price, directly to the Exchequer. There is an increase of 3 per cent on the pint. A working man who needs a few pints after his day's work or during his relaxation period must pay 21p directly to the State. He was paying more than 18p up to now, but that was not enough. Whiskey and spirits are consumed by many elderly people and it is sometimes as good a medicine as any of the bottles and tablets being thrown around. These people like their little drop and are entitled to it. This proposal is putting it beyond their reach.

The price of a glass of whiskey is now 41.6p, the price of 20 cigarettes 28.5p and a pint of stout costs 20.83p. These figures do not include the VAT that the traders will have to pay. We are leaning heavily on the people and it is no harm for the general public to know what they are paying directly to the State when they buy a drink, tobacco or cigarettes. These increases are completely out of line at a time when a contributory old age pensioner is supposed to live on £15 odd a week. Whatever about the ill-effects of drinking or smoking, people like it and find that it helps them to relax or to overcome problems and for them it might be the best medicine possible. I strongly object to the hardship that these increases will impose on these people.

There has been little change in income tax allowances. Under the the income tax code the child allowance was reduced from £240 to £218. In a year with so much inflation one would have expected the allowance to have been increased. This reduction is supposedly to compensate for a small increase in the children's allowance. What good is £240 at the moment in relation to school children, particularly children in second or third level education which costs more than £1,000 in most institutions for each child? A family with three or four children in second or third level education institutions were allowed £240 and are now allowed £218. The middle income people are becoming the new poor. They have to scrape to put their children through secondary school and college and because they are outside the limit for educational grants they must pay for everything. The figure of £218 is completely unrealistic and inadequate for a child allowance in income tax assessments. When social welfare is increased an amount is set down for the husband and wife and the children but when the income tax allowance is increased to take account of the inflationary trend and the dwindling value of money, there is no mention of an increased allowance for the child, except a reduction in the existing allowance. The Government have given an extra tax free allowance of £500 to a man and wife and £250 to a single person, but on the other hand they have reduced the children's allowance by £22 per child. I strongly object to the size of the allowance for children.

Even though it is not usually discussed in the budget I will refer to school transport, with which there is a lot of dissatisfaction although it costs a lot of money. I am sure every TD and councillor has had representations about the school transport system for both the primary and secondary school children. If we had public relations officers to approach the schools and meet the parents so as to do away with this letter writing business, which is completely ineffective, a solution would be found possibly without entailing any additional burden on the Exchequer. I avail of this opportunity to say to the Minister of State, Deputy Tunney, that if he had some of these officers to meet the parties concerned I think many of the problems could be solved. In a few cases where this happened and where the right kind of person was doing the job everything worked out satisfactorily. More use should be made of men on the road, if I may use that term. One such officer could travel over a large part of the country in four, five or six months meeting people where these difficulties arise and trying to reach arrangements with the schools, the parents and the children on the most favourable terms possible.

An Leas-Cheann Comhairle

The Deputy has about three minutes to conclude.

Mr. M.P. Murphy

There are so many headings here one would want 33.

An Leas-Cheann Comhairle

The Chair might agree but unfortunately cannot give it to the Deputy. The hour is well nigh up.

Mr. M.P. Murphy

I already mentioned borrowings. I understand that the figure approved last year was £821 million. We borrowed £810 million and the figure will be somewhat similar this year. We were to be in the EMS by 1 January; we were to be in by 15 January and we are to be there by 1 April. It now seems likely that we may not arrive there at all in the foreseeable future. I should like the Minister to give some account of the cost of servicing borrowings. It is a sizeable figure in the Book of Estimates.

Within the time available I have little opportunity of referring to social welfare. The accounts are completely inadequate for what I would describe as hardship cases. There is no comparison between a pensioner, particularly an incapacitated pensioner living alone or with members of the family but entirely dependent on the pension for a livelihood and, say, a pensioner living with a family who are in rather affluent circumstances.

In that case the pension could be deemed to be pocket money. Health boards are not now favourably disposed towards supplementing old age pensions in such cases. I do not want to go into the matter now other than to say that there should be some further categorisation of pensioners. We should help the extreme cases. We did that when we increased the pension for those over 80. That was a good idea but I think we must do it again in regard to the income bracket. Some direction must be given to local authorities to supplement the means of old age pensioners, widows and all others who need special attention.

In conclusion, I oppose the agricultural levy. It is opposed by thousands all over the country. I hope that as a result of whatever dicussions took place at the Government's party meeting yesterday this type of taxation will be abandoned because this is the thin end of the wedge. Two per cent this year if allowed to continue could, one might anticipate, within five years become 10 per cent as the minimum value-added tax now is.

Mr. V. Brady

The budget introduced last week takes a stage further the Government's plan for economic expansion as outlined in the White Paper. It is designed to continue the excellent progress made in 1978. The Government, since coming into office in 1977, inherited many serious problem, the major ones being unemployment and spiralling prices due to the everincreasing rate of inflation. These were two areas in which all control seemed to have vanished. The years 1975, 1976 and 1977, one can appreciate, were difficult years. Nevertheless, it appeared that very little effort or planning had gone into any programme to do something towards providing a solution at the time for those problems.

Last year, under Government planning a net 17,000 new jobs were created, the largest number ever created in one year in the history of this State. Inflation was also reduced to the target figure of 7.6 per cent. It is generally accepted throughout the country that there is greater confidence, that confidence has been restored particularly among investors anxious to invest in Irish industry and create jobs for younger people. One can sense in the community a greater feeling of assurance which replaces fears and anxieties that existed three years ago.

The budget sets out to balance standards as far as the various communities are concerned. It has given very generous allowances and—nobody will deny it—well deserved increases to recipients of social welfare benefits. The Government have constantly emphasised the need to maintain living standards at least in line with the cost of living for those unfortunate enough to be on social welfare and dependent on social welfare benefits. The Opposition parties, particularly Labour—their benches, I note, are empty at the moment—seem to have the notion that they are the guardians of social welfare and that only they have ever done anything worthwhile by way of increases for the aged, the widows, the unemployed and the other welfare recipients. One has only to look at the record of Fianna Fáil over the years to see what a fallacy this is. As a party, we have always acknowledged our commitment to those less fortunate citizens by action and that is what counts, not mere pious words about what should be done when in Opposition and when in Government doing very little.

The Minister made the point in his speech that excessive income increases do not make the task of maintaining living standards any easier. In this context one has to bear in mind the living standards of the less well off section of our cummunity. I commend the various trade union officials who have adopted as their policy in recent years a sort of watchdog approach in the interest of social welfare recipients. I wish they would act more positively in a practical way by ensuring that excessive wage demands are not made because such demands only erode benefits on any increases given to the unemployed and those on social welfare.

The weaker sections of the population are entitled to better consideration from those better off and, particularly, from those sections of our people who are in secure employment. I was pleased that the Minister in the budget recognised the exceptional circumstances of our old age pensioners and long-term recipients. The easing of the means test in certain ceases is also to be welcomed. I would like to see a higher allowance against capital, such as life savings, in assessing a non-contributory old age pension. The budget increased that allowance from £25 to £200 as the amount of capital which will not be assessed for a means test. A person who has been thrifty during his or her working days and in non-insurable employment can be penalised in such circumstances. I am aware that the vast majority of old age pensioners are contributory and were previously in insurable employment. This means test is applied to those other pensioners who were not so lucky. I hope the Minister will look at this section carefully.

I hope the Minister will be able to continue the improvements he started. I should like to comment on one of those improvements, the provision of a free telephone service for certain people. We are all aware that the free telephone rental granted to pensioners living alone was introduced by Fianna Fáil. However, an anomaly arises in this regard particularly in the case of a husband and wife who are old age pensioners and live alone. While the scheme has been extended in the budget to include pensioners living alone with a permanently incapacitated person—a very welcome extension—I would like to see consideration given to cases where a husband and wife who are old age pensioners are living alone. They would benefit from such a scheme. The scheme is an excellent one and originated in our pre-election manifesto. Like all the commitments and promises contained in that manifesto it was put into operation when we took office. I have no doubt that the Minister for Finance and the Minister for Social Welfare will continue to monitor this excellent scheme and I expect we can anticipate further improved extensions in it in the future.

The increases granted to social welfare recipients were worthwhile. Those who are forced to live on social welfare benefits should share in the fruit of the growth in the economy. That growth will continue in line with the plans set out in the recent White Paper. The Minister is to be congratulated on the special distribution of increases in children's allowances. The increase given on average amounts to 28 per cent. I am sure nobody would try to justify the paying of children's allowances to the very well off and under the children's allowances system that was what was happening. Like food subsidies, the deserving people do not benefit that much while the well-off are being subsidised by the State. The new system will benefit the less well-off because those not liable to pay income tax will receive the full increase in the allowance. In view of the increase in the personal tax allowance the number benefiting from both improvements will be substantial. In the region of 40,000 taxpayers will be free of any liability to pay tax.

In families where the breadwinner is on a high income and liable to income tax the mother will be the real beneficiary as far as the increase in children's allowances are concerned. That is as it should be because, generally speaking, it is the mother who looks after such matters as the purchase of clothing and footwear for children. The increase will be paid direct to her. That is a good thing because the allowance can be directed towards the care and welfare of the children.

Those liable to PAYE are entitled to have a grievance and feel aggrieved because of the amount of tax they pay under that system as against that paid by farmers and professional people. Those liable under PAYE are caught for every penny they earn and, due to the excellent method of tax collection under that system, there is no way out for them. Nobody, least of all those liable under that system, resents this because the system ensures that all wage earners liable under it pay their full share of taxation. Unfortunately, the same closed system does not apply elsewhere. In such occupations as farming, solicitors, doctors, dentists and small businesses that system does not apply. In recent years prosperity has increased substantially in farming, particularly since our entry into the EEC. It is generally accepted that farmers work hard and cannot get by on a five-day week working from 9 a.m to 5 p.m. His role is very important for the country and of benefit to all the community, rural and urban. The farmer may also suffer losses. Crops may be poor because of weather conditions and there may be a loss of animals due to disease. Such setbacks cause financial loss and may create serious problems in regard to development. These problems may not be fully appreciated by the urban dweller. Having said that, here is the catch. If the farmer does not make a profit, his income is not taxable.

The Minister's figures show that the tax contribution from farmers last year represented only 4.5 per cent of farm income. I do not think anybody, least of all in the farming community, would argue that such an insignificant figure could in any way be justified in comparison with the PAYE contribution which represents 16 per cent of earnings.

Since the introduction of the budget last week there has been a certain amount of criticism from farming organisations, and this is not surprising. Nobody wants to pay tax if he can get away with it and we would all complain about increased taxation. When a new form of tax is introduced for any section of the community there will be objections, and it is not surprising that we have heard this criticism and a general hue and cry from farming organisations during the past week. The statements which have been made are very much at variance with previous statements and commitments by the farming community to the effect that they are at all times anxious to pay their fair share of taxes. One is tempted, therefore, to ask what is considered a fair share of taxes. Is it expected that the employee paying tax through the PAYE system should continue to carry the main burden of taxation while the agricultural sector will this year receive in State aid £160 million, along with a further estimated £385 million from the EEC? It is not realistic that the tax paid by the farming community should represent such a small percentage of total income. As I have mentioned, I am quite sure that privately every farmer is prepared to accept his share of liability for taxation. One would hope so.

Obviously the new levy of 2 per cent is viewed with concern by the agricultural community. A tax at source is nothing new as far as the industrial taxpayer is concerned. We have had taxes of a similar type before and had no option but to accept them in the interests of the community as a whole. There is nothing new in people having to contribute to the cost of services. It must be remembered that the levy will be used to pay for agricultural services. People wishing to avail of training services, small traders and business people, have to contribute to AnCO. These levies are accepted by the business community and I cannot see any reason why the farming community should not accept similar levies. I sincerely hope that this levy will not eventually be passed on the consumer, and any attempt to do this should be completely rejected by the Government.

The ongoing battle of words, accusations and counter-accusations between various PAYE groups and farming organisations is not a good thing, and to many people it represents a conflict between the farmer and the urban dweller. This can create a certain dissension between communities at some levels.

Farmers are not the only culprits in regard to taxation. Tax evasion is completely different to tax avoidance, as represented by the farmers. It is more serious and probably causes the loss of a great deal of tax revenue. In his speech the Minister said there was evidence that self-employed persons, for example, traders, landlords and professional people, were not making any returns at all. I hope that swift action is taken by the Revenue Commissioners when they have knowledge of such cases. I would assume such people are not only failing to make income tax returns but are also neglecting to make VAT returns. The amount of revenue involved is probably very considerable. I could not hazard a guess at the probable amount, although recently various sources have mentioned hundreds of millions. If that is so, consider how the Exchequer could utilise such additional funds, particularly in relation to job creation. It would also help to ease the burden of the PAYE taxpayer.

In regard to tax avoidance and evasion, I am sure we could include the ever rising number of roadside traders. The number of weekend traders is growing rapidly in all parts of the country. This is seriously detrimental to employment, and unless swift action is taken to control this business the established trader will find himself in serious trouble and employment will suffer as a consequence. I would urge the Government to give priority to ensuring that all tax liabilities are discharged properly and fairly.

Consideration should be given to making a tax allowance to persons obtaining services from the medical and legal professions and from small traders, builders and motor repairers. In this way full details would be furnished to the Revenue Commissioners because any person obtaining such services would give this information in submitting annual returns.

From the point of view of administration this might be difficult. Nevertheless, it would be in the interest of taxpayers generally and would be worthwhile on two fronts—firstly, it would register the person providing the service, and the taxpayer obtaining the service might have an additional allowance for what would be considered necessary expenditure. As far as I understand an informative reciprocal system similar to that I suggest is being operated already at VAT level. Therefore, a base is in existence and I feel certain such a move would be very popular with taxpayers and with the populace generally.

I note also that the Minister is making a provision for a substantial strengthening of staffing of the Revenue Commissioners to enable them mount an attack on tax evasion. While I would accept that some traders may be furnishing inadequate returns, accountants involved in modern business will agree that this can be very difficult on a long-term basis. The small trader or businessman has to work very closely with his bank. From that point of view it can be very difficult for a trader to continue year after year furnishing incorrect returns. No auditor will stand over such action. As we are all aware, the old adage from an accountant's point of view is: one can have one set of books only. I hope attention will be concentrated on the tax evader, not on those making some return, and that the legitimate small trader will not be harassed unduly by over-zealous officials in an effort to justify their appointments.

One of the major problems inherited by the Government on assuming office in 1977 was unemployment. At one stage the official listed figures stood at 116,000. The outlook was indeed bleak for school-leavers and those seeking work for the first time. In last year's budget the Government planned a job creation programme under which 23,000 jobs were to be created by the end of 1978. The overall results achieved surpassed the target: over 25,000 jobs were created in that year, being the largest number of jobs ever created in the history of this State. This year's budget has been designed also to tackle the problem of unemployment and take a further step toward the objective of full employment as outlined in the White Paper debated in the House last week.

The main growth in employment this year is anticipated to emanate from the continued expansion of industry and inflow of new industrial projects. The Minister has put at the disposal of the industrial promotion agencies some £131.5 million, an increase of 38 per cent on the amount of money spent in 1978. This is a clear indication of where the Government see their priorities as far as the creation of employment is concerned. If industry is to meet this challenge it must do so through all possible competitiveness. In itself this will dictate strong discipline and raise the all important question: can our management, trade unions and workers generally meet this challenge in a responsible way? I believe they can. In this respect we have only to look across the Irish Sea to observe what is happening in Britain because of greed and immaturity. That country is in chaos. Each day it is steadily going downstream to become not alone the laughing stock of Europe but heading for the dubious title of the most underdeveloped partner within the EEC.

During 1978 Ireland showed the highest growth rate within the EEC, and this has attracted widespread attention among foreign manufacturers, industrialists and investors interested in setting up industry in a rapidly-developing country. We are told that the Industrial Development Authority, as a result of their promotional efforts last year, have on hands a huge number of inquiries from abroad. Nobody, least of all those in secure employment, should try to rock the boat without first giving very serious and careful consideration to the consequences of their actions. This should be emphasised over and over again. It has been said that we in Ireland have adopted the attitude of "I'm all right, Jack. Do not worry too much about the other guy or the unemployed, the State will look after them." I do not believe that assertion and certainly I hope we have not reached that stage. We need leadership at trade union level to bring a more positive and practical attitude to the surface. As we are all aware, there are very many responsibly-minded men and women involved in the Irish trade union movement. I say: let us hear from them; let their voices be heard. The late President Childers referred often to bad news making news. Unfortunately, sensationalism has become the trendy thing for those wishing to make publicity in the media today.

The Government programme for the promotion and stimulation of industrial development compares more than favourably with any undertaken anywhere else in the world. However, to be fully successful and to aim at the ultimate objective of full employment we need also a satisfactory economic climate. It is fair to say that the budget has been accepted generally as constituting a constructive programme towards the aims outlined. It has devoted proper consideration to the weaker sections of our community and continues to give the stimulus required to private enterprise to create a better climate for greater employment.

Disappointment has been expressed in some quarters that the number of jobs emanating from the private sector in 1978 was not greater. Certainly the incentives exist. In the coming year I hope the private sector will make decisive progress in achieving the various employment targets set.

The "Buy Irish" campaign continues. I question whether there will be any dramatic success in this campaign. During 1978 the point was made frequently, indeed repeatedly, that were we to spend only an additional 3p in the £ a further 10,000 jobs would be created. I have often gone into some of the leading stores in town and, to my amazement, I just did not have a choice of Irish made goods. It is impossible to expect the average consumer to insist on Irish goods because if he did he could return home very often with his money still in his pocket.

Unless buyers in stores can be persuaded to stock a good range of Irish made goods—I have clothing in mind particularly—we will never make any real inroads into the buying of foreign goods. As we all know many people do not think too much about buying Irish but when things reach the stage where one is conscious of buying Irish and one wants to buy Irish and goes into a store in the city and cannot have a choice of Irish goods it is time to consider what action, if any, should be taken. Such action would be in the national interests, and indeed nobody would doubt for one moment the quality of Irish made clothing. It is as good as anywhere else in the world. In talking about this subject I feel tempted to name stores but naturally I will not do so. I would only say to such stores that they should become very much aware of the bad publicity that they might receive in the future if this situation continues.

I would like to congratulate the Tánaiste on what I consider to be an excellent budget, a broadly based budget. The fact that opposition leaders can only clutch at straws and make scurrilous accusations speaks for itself. Reading last Sunday's paper I thought it rather amusing and interesting to read that the Labour Party leader denounced the new taxation on the farming community. Indeed, I had to read it twice to see if I was seeing things in view of that party's very unfair attitude in the past towards the farming community in calling for a huge jack up in farm taxes generally.

In conclusion, I would just ask how many hats the leaders of the Opposition parties wear, because they wear so many from time to time that it can be very baffling for the ordinary person. On that dizzy note, a Cheann Comhairle, I will conclude.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): It is not possible to deal with this budget without first having a brief look at the 1978 Budget. The 1978 budget, in my opinion, was an unjust and very unfair budget. It was a budget which made the very well off people much better off. It put as much as £1,500 or £2,000 into the pockets of well off people by relieving them of rates on houses with a very big valuation, by relieving them of tax not on one car but on as many as three or four cars, and by giving them very generous allowance in income tax. The net result was to increase the net income of well off people very substantially. The Government have no option but to do that because they were tied to that sort of policy in their election manifesto. The same budget of 1978 paid little or nothing to the family man who was barely able to pay his way, living on a small salary, to support a wife and family. That man got little or nothing out of the 1978 budget.

The result is that we have had growing industrial unrest in this country since. We have had strike after strike both in the public sector and in the private sector. It is no exaggeration to call it industrial chaos because the people here, conned by the Fianna Fáil manifesto, found that the goods had not been delivered and that they were worse off with Fianna Fáil than they had been.

Let us have a look at what happened between the 1978 budget and the budget that we are now dealing with. The Government proceeded to attack the less well off. It has been said by Deputies speaking on this budget that we had another budget earlier this year. Yes, we had. The weaker sections of the community were attacked by the withdrawal of food subisidies between Christmas Day and New Year's Day. That was a tax imposed to the extent of £22 million. It increased the cost of living very substantially. These subsidies were withdrawn by a Government who, in opposition and in the election campaign of 1977, undertook to increase the subsidies substantially. On 8 June, 1977 there was a mid-day radio programme broadcast on which the outgoing Minister for Agriculture, Deputy Mark Clinton, and the present Minister for Agriculture, Deputy Gibbons, participated. Deputy Gibbons said that the then subsidies of £63 million were not nearly enough and that if he got into Government Fianna Fáil would increase these subsidies substantially. What do we find? We find not alone have these subsidies not been increased but that they have been reduced by one-third to the extent of £22 million as the first instalment towards abolishing them altogether. That was the announcement on 8 June 1977, reported in the Evening Herald of that day. It was a substantial attack on the incomes of less well off people between the 1978 and 1979 budgets.

Many attacks of that sort have been made by increases and withdrawals of free services. In the past number of months I have been trying to find out the position in regard to medical cards. I put down a question and found that 25,000 medical cards had been withdrawn in the quarter ended last September. I then got curious and tried to find out how many medical cards had been withdrawn or cancelled since Fianna Fáil assumed office in July 1977, and I was told that the information was not readily available and that it would be supplied later. It was not supplied later, and I wrote to the Minister for Health reminding him of his promise, but after a week or so I still had not got the information.

I then put down another question to the Minister for Health. I was due to speak on the Health Contributions Bill on Wednesday last at 3.30 and naturally I was anxious to have this information. I could not get it, though the question had been down for reply that day. While I was speaking, a letter was handed to me from the office saying that the information was contained in a tabular statement which was enclosed. The tabular statement was not enclosed. Later I got a reply from the Minister for Health from which I learned that between July 1977 and September 1978 the Government cancelled or withdrew 84,823 health cards in relation to people who had them when Fianna Fáil came into office.

That is a brutal attack on less well off people, lower income people. I had known that this hunt, this attack, has been going on and I had to work very hard to get the information. There it is, 84,823 medical cards, which had entitled people to free medical practitioners' attention, were withdrawn or cancelled between July 1977 and September 1978, and the hunt is still going on.

That is the climate in which we have to consider this budget before we come to the Financial Resolutions at all. When we come to them we find that the tax on whiskey has been increased by 6p per glass, on cigarettes and plug tobacco, which I have not heard anybody claim to be injurious to health, by 6p and on the glass of beer by 2p. On top of that, the Minister for Industry, Commerce and Energy has sanctioned increases on beer, cigarettes and whiskey, again increasing the prices substantially. We must add to that the removal of the food subsidies and the withdrawal or cancellation of 84,823 medical cards, at a time when the Taoiseach and the Ministers for Finance and Economic Planning and Development have been calling on the workforce to exercise restraint, to tighten their belts and to be responsible so that the targets set in the Fianna Fáil manifesto can be achieved.

Against these price and tax increases and the withdrawals of free services, we have to try to find the incentives being offered in the budget to PAYE contributors who are the people being asked to tighten their belts, to restrain themselves and to accept modest incomes.

The single man with £80 per week is to get a relief of 43p per week from income tax. That is supposed to compensate him for the withdrawal of food subsidies, the increased taxes on beer, whiskey and cigarettes and for the loss of his health card, if he had one. If he is a married man with four children earning £80 a week his relief from income tax is £1.50. That is supposed to compensate such PAYE contributors for all the increases in the cost of living that have taken place in the past 12 months from what I would call ordinary causes.

Are this Government living in wonderland? Have they so quickly lost all touch with reality? This budget does not offer any incentive, good, bad or in-different, to the people in the income group I have just been speaking of, the people who are being asked to exercise restraint.

I come from an agricultural constituency, Cavan-Monaghan, composed mainly of small farmers, and I regard the proposals for agricultural taxation in the budget as a savage attack on all farmers, even if they are earning only half the income which would attract taxation. The proposals in this budget for agricultural taxation will deal a serious blow to production. They will kill incentives in agriculture and will drive certain people out of livestock production, particularly pigs. They will kill the pig industry.

It is known that in the campaign leading to the 1977 general election Fianna Fáil through their manifesto, but in particular through their canvassing, wooed and won the farming vote in Kildare, in Laois-Offaly, in Tipperary, in north Kerry, in my constituency of Cavan-Monaghan and in the western constituencies. Many Deputies on the Fianna Fáil benches owe their seats to the fact that they convinced the agricultural community that all they had to do was vote for Fianna Fáil if they wished to hear no more of income tax or to any form of taxation. Where are the rural Deputies of Fianna Fáil now? We have not heard from them. The Deputies who contributed to this debate so far on behalf of Fianna Fáil have been Deputies Moore, Woods, Liam Lawlor and Vincent Brady each of whom comes from Dublin city. Where are the farmers in Fianna Fáil? A short while ago I noticed Deputy Callanan walking through the lobby. He is a man who sits here consistently listening to debates and taking part in them but where is he now? Those Fianna Fáil Deputies are ashamed to come here and face up to the treatment that has been meted out to Irish agriculture. They are waiting until next week or the week after when they will come in and boast that they twisted the arms of the Tánaiste and the Minister for Economic Planning and Development in order to try and make them see sense. Is it any wonder that some of these Deputies have gone home? They would be ashamed to stand up here and endeavour to justify the promises they made to the agricultural community. They are ashamed to take their seats because if it had not been for their grossly misleading the farmers, they would not have those seats. Consequently, they do not consider themselves entitled to sit in them now.

Let us consider the treatment of the farmers since Fianna Fáil were returned to office. First I wish to go on record as saying that apart from the manifesto, Fianna Fáil candidates, their supporters and canvassers, convinced the farmers, on the basis that the National Coalition were savage to them, had taxed them out of existence that if Fianna Fáil were returned to power there would be no more talk of taxing farmers. In the short time that Fianna Fáil have been in power they have withdrawn the subsidies on agricultural manure thereby increasing the cost of this commodity to every farmer regardless of whether he has five acres, 20 acres or as much as 100 acres. Following that the Government introduced legislation to abolish the agricultural grant which had been in existence at least since the beginning of this century and which had the effect of relieving farmers from some of their rates. That grant was abolished from I January 1978 down to a valuation of £75 and from 1 January 1979 the figure was reduced further to £60. In that way the Government increased the rates of those farmers by from 33 to 60 per cent regardless of whether they were liable to pay income tax. Many of them were not liable for income tax even under the thresholds that applied then because of family commitments, because of losses sustained or for other reasons.

The Government then reduced the threshold for income tax liability from £75 to £50 valuation and they increased the multiplier from the figure of £65 at which it stood when they assumed office, to £125, notwithstanding the fact that they had written into their election manifesto the promise to retain the notional system of income tax for the farmers. That promise has not been kept because by increasing the multiplier from £65 to £125, the Government have coerced all farmers to keep and to produce accounts.

The next imposition on the farmers was the decision to charge them for the testing of cattle in respect of brucellosis and TB. A 30-day test was introduced and even if a farmer had only one or two animals to sell he had to pay the £8 fee. That operation fell much more heavily on the small farmer in counties such as Cavan and Monaghan who keep store cattle because the big farmer who is fattening cattle and selling them to the factories is not concerned with the 30-day test. That was the first time this happened. There is another proposal in the budget to extract from the farmers either £9 or £14 million, I am not sure which, as a charge for disease eradication services during the coming year. Is it any wonder that the rural Deputies in the Fianna Fáil party are ashamed to come into the House? Not one of them has spoken in the debate.

Some of the things I have been talking about like the widening of the income tax net can be said to be based on the farmer's income, either notional or actual income, but the withdrawal of the subsidies on artificial manure hits all farmers big and small. The 30-day test and the £8 charged for that test hits all farmers but more particularly the small farmer. The proposal to charge for services for disease eradication hits all farmers regardless of their capacity to pay. Then we come to the most appalling and outrageous proposal that has ever been introduced and nobody only a genius like the Minister for Economic Planning and Development, who has so many bright schemes that have gone wrong, could be capable of thinking up a proposal to put a levy of 2 per cent on all farm incomes. We hear that the farmer's income has increased substantially. It has increased from a base which was below subsistence level. Most of us are farmers or have just left farms. We know what the farmers went through during the economic war. We know that they were marched ill-prepared into the second world war and what they went through. Farmers and their wives were unpaid slaves up to a short time ago. It is true that their incomes have increased but, even yet, the vast majority of farmers—I am not one who goes in for statistics—are earning less than a county council road worker. The farmer's income is not only for himself but for his wife and very often some of his children. That is the situation we are dealing with. The proposal to impose this levy on cattle, milk, pigs, sheep, sugar beet and cereals regardless of the income of the farmer, regardless of his ability to pay or regardless of whether he is earning £20,000 or £5,000 a year, is outrageous and one that cannot be justified by economics or by financial strategy.

I listened to Deputy Lawlor speaking this morning. He seemed to think that it only affected bullocks and, as far as cattle were concerned, the small farmer would be attended to. One would think he never heard of a cow because he never mentioned them. If he lived in Cavan or Monaghan he would know all about cows. Deputy Vincent Brady gave a lecture to the farmers this morning about the taxes they should pay and the way they should run their lands. It is not good enough for the Government to send in Dublin-based and Dublin-minded Deputies to lecture the farmers. That was what we have had in this budget debate so far.

I would like to put on the record of the House the fact that a farmer in County Cavan or Monaghan with ten cows is a very small farmer. He would not even be considered for income tax at present. Yet that man is going to be asked to pay about £80 a year for his ten cows. If he has 20 cows he would still be a small farmer and would be far outside the income tax net. He is going to be asked to pay £160. What sort of a crazy mind conceived this idea? What sort of thinking produced this proposal that a married man with five or six children who has 20 cows will be asked to contribute, through the creamery, a levy of £160? He would not be liable for rates. That man is really only existing. Yet that is the proposal of the Fianna Fáil Government.

Every bullock that goes into the factory or is exported will attract a levy of about £10. This will affect livestock all down the line because the man who will buy that bullock, or a store animal to fatten into a bullock, will have to pay the £10 levy when he is selling the bullock. He will get so much less for the store animal he is buying. If he does not, he will be in trouble.

The aspect of farming economy that I am most familiar with is dairying. This is the backbone of the agricultural economy in my constituency. The proposal to tax farmers on their cows is outrageous. It is no wonder rural Deputies from my constituency packed their bags and went home on the frosty and snowy roads yesterday rather than come in to-day to participate in this debate. They knew they could not do so.

At least one-third of the pigs produced and fattened in this country are produced and fattened in my constituency. It is a constituency that specialises in pigs and poultry. The hen has escaped from the tax net. It is a wonder they did not attack her as well but if they continue along the way they are going it will not be long until they do so. Even Deputy Lawlor knows that the margin of profit in pig production is small. The proposal here is to impose a tax of £1.20 on the finished pig. The food consumed by the pig will have been taxed already to the tune of 50p or 60p under this levy proposal. Deputy Lawlor seems to appreciate that will kill the pig industry and the employment given by it. It has been put to me that the tax proposed to be put on pigs is equivalent to another labour unit on each farm. That is the proposal that the Tánaiste, ably abetted by the Minister for Economic Planning and Development, has brought into this House.

My part of the country does not go in for cereal or beet production but I am told by other Deputies—and I speak subject to correction—that the proposals in the budget are to tax cereal and beet production by £5, £6 or £7 an acre. All of this is being proposed regardless of the ability of the farmer to pay and regardless of his income. This is from a Government who wept bitterly about the way farmers were treated during the term of office of the National Coalition Government.

I believe the Government had proposals to attack the small farmers' dole and that between the publication of the Book of Estimates and the budget they had second thoughts about it. We have before us the proposals of the Government three months before the local government elections and the European election when they will be seeking again the vote of the farming community. I ask myself what kind of budget and what kind of proposals would they have introduced if there were no elections pending this year?

The Government have got completely into the hands of the well-heeled people who supported them and put them into office; they have lost sight of and have lost touch with rural Ireland in a very short time. We know it was the well-heeled people who led the campaign that put Fianna Fáil into office. Last Sunday I had a rather unpleasant experience in an hotel in Sligo. I was attending a convention a few miles away. In the hotel a well-dressed gentleman said to me, "Better luck next time, Tom". and, assuming that he was a supporter, I smiled at him. He came back and joined me and two other people. I do not know his name but he happened to be an ardent Fianna Fáil supporter. He launched into a sarcastic attack on my party and on me and he boasted loudly about the way we were rejected and Fianna Fáil were back. That man was accompanied by another equally well-dressed person——

Minister of State at the Department of Finance (Mr. Wyse)

They must be doing well.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): He referred to the 84 seats not once but about 20 times in the short, objectionable interview. Eventually I had to call the manager of the hotel to get away from this person.

An Leas-Cheann Comhairle

The Deputy must have more patience than the Chair.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The point was that, like a gramophone record, this man kept harping on the 84 seats. The 84 seats are looming large so far as the agricultural proposals in the budget are concerned.

We have been told by Government speakers that never were so many jobs created in the history of the State. If the 25,000 new jobs have been created, how have we 103,000 people unemployed, notwithstanding the fact that about 14,000 people have emigrated since Fianna Fail came into office? That is a simple question that needs answering. Earlier this year the Taoiseach said that were it not for redundancies the Government target would have been achieved——

Mr. Wyse

Exceeded.

Mr. T.J. Fitzpatrick

(Canvan-Monaghan): If the Fianna Fáil promise meant anything, surely it meant that the 25,000 jobs would be created in addition to maintaining existing jobs. They did not say they were going to substitute 25,000 jobs for the same number of jobs lost. That would mean nothing and they would not be thanked for it. There are still 103,000 people unemployed; if the Government wanted to cheesepare and take the women off there would still be more than 100,000 unemployed—in addition to those who have emigrated.

A Deputy stated here this morning that the engine had been fuelled and the pump had been primed, and we were told last year that the Government when they came into office would prime the pump and the private sector would take over. We find that even the Minister for Finance in his budget speech seems to concede that most of the jobs being created this year will again have to be created in the public sector. We know that it takes at least two jobs in the private sector to pay for every one job created in the public sector. That is a short-term policy, a policy which an auditor would advice his client not to continue. It is obvious that the Fianna Fail proposals have misfired, that the private sector are not providing the jobs, and in order to save their face the Government will have to continue in the public sector.

They have some funny ideas. They promised in their manifesto to have a campaign to buy Irish which would switch 3p in the £ to home production and in that way create a great number of jobs. We know now that this has absolutely and utterly failed. If the Government had started a campaign to buy Japanese goods they could not have succeeded in importing more Japanese goods than they have.

Mr. Wyse

You imported Japanese ships. Let us be honest.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The Minister is becoming sensitive. You imported £40 million worth of Japanese cars in a few months and if you had started a campaign to import Japanese goods you could not have done better in importing Japanese goods than you have done.

Mr. Wyse

This was a ship for Ireland; we had Verolme here.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I am talking about your manifesto, your promise and your miserable failure to deliver.

Mr. Wyse

I am talking of Verolme.

An Leas-Cheann Comhairle

Deputies must address one another through the Chair. None of these Japanese ships belong to me.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): It would be inappropriate for me to get into a discussion on Verolme. The Minister will probably know what I am talking about.

Mr. Wyse

I know.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The balance of trade has gone haywire and is getting worse since this Government came into power. It is no wonder that the Minister interrupted me when I referred to his Buy Irish campaign and all the jobs it was going to create. I regret that a lot of the jobs created in the last twelve months were cosmetic jobs, as the Leader of this party said. The young people were led to believe that the present Government if elected to power would provide them with jobs. The young people cannot be blamed if they expected that the jobs they would get would be lasting jobs and not jobs for only a few months. For example, in my town last year it was decided to build a wall. It is true that the operation created more employment than was anticipated because the wall was built over several months and then a shower of rain came and it collapsed and had to be built again. That is not the sort of employment young people expect.

I regret to have to say that my constituency colleague, the Minister for Education, announced with a great fanfare of trumpets that he was going to recruit 600 people and put them through a crash course so that they would be qualified teachers. He got his 600 recruits, they qualified, and months after they qualified half of them have not yet got jobs. I understand that the Minister for Education said, on a radio programme which I did not hear, that he could not employ them because there was no building in which they could conduct classes. He said that it was not his business to provide those buildings, it was the business of the school management boards. In most cases 90 per cent of the cost of these buildings is defrayed by the Minister for Education and they are built through the agency of the Minister of State at the Department of Finance who is here with us today. When these teachers were being recruited, why were not steps taken to provide the school buildings for them? I am sorry for the Minister for Education because he qualified the teachers and his colleagues in Government let him down by not providing the money for the buildings to get on with the work.

Mr. Wyse

We provided the money. The largest sum of money ever provided for school building was spent by this Government.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Is it not a fact that of the 600 teachers recruited and trained approximately 300 are still unemployed? It cannot be denied that they were taken from other jobs, trained as teachers and 300 are still not employed because the Government could not provide buildings.

Mr. Wyse

The biggest building programme as far as schools are concerned took place last year.

An Leas-Cheann Comhairle

Deputy Fitzpatrick.

Mr. Wyse

He asked me a question.

An Leas-Cheann Comhairle

The Deputy is entitled to pose questions but not to have them answered at this stage.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I did not ask a question. I provoked the Minister into intervening.

An Leas-Cheann Comhairle

The Deputy should not even try to provoke the Minister.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): It is very hard to conduct a debate without stating facts, and the facts provoked the Minister. I would like to talk briefly about the social provisions of this budget which, it has been claimed here this morning, are worthy of welcome. Last year no increase was given on children's allowances. An increase is given this year, but it has been gobbled up by the increase in the price of milk which was brought about by direct Government action a month before the budget. The increase in children's allowances no more than compensates the families concerned for the increase in the cost of food for children which was brought about by direct Government action in January of this year. I want to put on record that the Government have in this Year of the Child taxed children's allowances by a clawback. They have increased the allowance and than taxed them by reducing the income tax allowance for children.

My time for speaking is almost ended. I could talk on prices and the direct action by which the Government increased prices. Again they wooded and won the housewives of this country on the basis that they would keep down prices. It is true that during the term of the National Coalition Government the price of food went up but it never went up as a result of direct Government action. When the National Coalition Government came into power there was 5 per cent VAT on food, clothes and footwear and we removed that tax. By doing so we did something to keep down the price of food. What have this Government done? In between the two budgets they removed the subsidies from food and by direct Government action increased the cost of milk, butter and bread. That is a disgraceful performance. The proposals for the agricultural community in this budget are an absolute outrage. They could only be conceived by people with no knowledge of rural Ireland and with no knowledge of the farming community but who are very conscious of their 84 seats.

Mr. B. Ahern

The budget is traditionally the highlight of the year and is something to which we all look forward. The Opposition may try to exact a few pounds of flesh from the Government, but the Government can enlarge on the good parts of the budget. This budget is no exception. Deputy Fitzpatrick referred to the fact that there was not another Dublin backbencher in the house, but it happens to be a very bad Thursday and the poor farmers in rural Ireland need the Deputies to give them a hand.

(Interruptions.)

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): It is certainly a bad Thursday for the farmers.

(Interruptions.)

Mr. B. Ahern

This budget confirms the Government's policy since they came to power. Most people recognise that this budget imposes no real hardships. A few years ago there was plenty to gripe about in the budget. A few years ago I remember a budget in which there were no tax concessions, when the tax rate went up from 35 to 38½ per cent, when drink was increased by 10p and petrol by 15p. That was a tale of woe. It is now more difficult to find something wrong with the budget, as is shown by arguments such as, for instance, that one type of tobacco is more injurious to health.

I am convinced that the Government are doing a good job. People are now more money conscious and are inclined to look for extra concessions. We are probably all a bit selfish that way. On Wednesday evening after the budget most people agreed that it was all right, but on Thursday morning sectional interests were complaining about the lack of concessions, and I suppose we cannot blame them for trying. We cannot blame the media either for catering for the sectional interests who kick up a row. Nobody came out and said that it was a great budget, but many said it was not too bad.

The opposition to the budget has been overplayed a bit. A week later, when things are settled down, rural Deputies are talking about the various benefits to farmers. Large sums for agriculture have been paid for by the PAYE people for years. The PAYE people never said that they would not pay their fair share of tax, but their share has been increasing year after year. It is fair for any city Deputy to come in here and talk about the taxing of farmers. The people he represents pay nearly 20 per cent of their earnings in taxation whereas the rural people, who have cars and fine houses, pay only 5 per cent, which includes rates.

An Leas-Cheann Comhairle

The Minister of State wishes to come in for a moment.

Minister of State at the Department of the Taoiseach (Mr. P. Lalor)

I apologise for coming in at this stage. By agreement between the three parties, in view of the fact that many of the staff had to stay overnight last night and are very tired, it is proposed that the House will rise immediately after Questions at 3.30 p.m. today to facilitate them and also to facilitate Deputies who wish to go back down the country before the frost sets in.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Is the Minister of State running out of Dublin Deputies to talk on the budget?

An Leas-Cheann Comhairle

Is it agreed or not?

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): I am only asking a question.

An Leas-Cheann Comhairle

That question does not arise.

Minister of State at the Department of Finance (Mr. Wyse)

We want to hear the Deputy talking about the PAYE workers. We did not hear about them.

An Leas-Cheann Comhairle

Is it agreed?

Mr. P. Lalor

It has been agreed between the Whips. I might add that initially it was at the request of the Fine Gael Party out of consideration for the staff.

An Leas-Cheann Comhairle

It is agreed. Deputy Ahern.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): Fianna Fail might have got Deputy Callanan to come in this morning as a substitute.

Mr. B. Ahern

There were at least another two or three Dublin Deputies who were disappointed that they could not get here today.

An Leas-Cheann Comhairle

Will the Deputies please stop?

Mr. B. Ahern

It is not our fault that we have too many Dublin Deputies. That was the decision of the people.

The budget is mainly concerned about striking a balance between social equity and fiscal equity. It is very difficult for any Minister for Finance to come up with the formula which will satisfy everybody. The Minister must consider the needs of investment, the resources available and the problem of trying to rid the country of inflation and unemployment once and for all. Certain risks must be taken each year in the hope that things will work out, that unemployment will decrease, that by investing money in what some people call capitalist groups sufficient interest will be engendered to increase employment and reduce the numbers on the dole. Also by the type of policy we have and by calling for wage restraint—we know this matter is under negotiation and will be under negotiation for some months yet—we are helping the weaker sections of the community and not allowing the inflation rate to zoom up and erode the social welfare and other benefits. This must be considered in an overall sense, and there is no point in anybody trying to disrupt things by taking a sectional interest and saying: "This is what should have happened; money should be there for it". It is a good game to play, but when it comes to the Minister for Finance he can only give in accordance with priorities. Those priorities must be examined from an overall national point of view. Most people agree that it was very well done in the past two budgets.

Deputy Fitzpatrick said that he could not discuss 1979 but he would look back at 1978. He feels that what was said in 1978 was not carried out. I think the overriding consideration was the Government's effort to come to grips with unemployment and inflation, as the Minister for Finance said last week and the Government's determination to restore stability in the national finances. Surely that has been carried out in the past two budgets. The government's expectation that the stimulus provided by the budget would create conditions in which the private sector would take over has been clearly stated in the past two budgets.

Acceptance of an increase in public borrowing is a temporary feature of the general strategy. That was what was done last year when borrowing was 13 per cent of the GNP. That has been brought back into line this year. Last year the Minister had the option of cutting down the national debt by doing away with some of the grants being paid out, cutting down the money given to IDA. That would have stifled the economy and we would have gone back to the former position where people wanted to invest outside the country. That was a disastrous policy, as I mentioned recently, and I shall not talk about it again today.

The figures for growth last year which were mentioned came out at about 7 per cent, the highest in the EEC and approximately double what the OECD had predicted. It was a tremendous achieve-ment although Opposition speakers said last year that such a figure was merely pie in the sky. This year they are saying: "This cannot be done; that cannot be done: it is senseless trying to create conditions in which these things could be done." They do not now talk so much about what was done in 1978 in regard to employment. An enormous number of jobs were created but unfortunately we had too many redundancies and the overall figure for jobs fell a few thousand short. As mentioned in the budget statement, perhaps that would not have happened if there had not been excessive wage demands.

There will always be anomalies and disparities in salaries and wages in various grades in various industries and there is always the need, probably, to isolate certain groups of people and give them over and above what is considered to be the national guideline because of particular interests or needs. That happened last year and pushed inflation a little higher than perhaps it would have been. Possibly, it created too much redundancy in certain areas. Perhaps some of those redundancies would not have taken place if the money given to various organisations had been used for investment purposes. I have already cited the example that grants given to some firms could be used to buy equipment which would lead to redundancy. When grants are given to a firm, workers may have to be deployed but they should not have to be made redundant because of the money put in. I know of one or two examples where this happened. It certainly happened in my constituency and I am sure it happened in other places. When we assist private enterprise I think they should have to adhere fully to guidelines regarding our overall objective, which is to create employment.

I think it is generally accepted by trade unions, farmers and others that we are trying to achieve a fast growth rate. It helps to increase competitiveness so that our exports can grow as fast as possible. In considering the matter of a fast growth rate it must always be remembered that the whole objective is to increase productivity and that we must look at the output of our industries. In certain areas our industries are still possibly behind EEC standards and in order to achieve the faster growth rate that we need and still get the investment needed to achieve this growth rate, the output of all workers, no matter how they are employed, must be increased. People speak of productive and nonproductive employment, but I like to think that everybody working is in productive employment. Because somebody is in an area of the civil service not producing any product does not mean that he is not productive. A productive service is as good as a productive industry.

During 1978 we had various debates in this House and outside it about the wide ranging short-term programme of direct job creation announced in last year's budget which created about 23,000 jobs. When we speak of 23,000 jobs in 1978, naturally some of these cannot be filled immediately and will be filled early in 1979. But some 23,000— 25,000 jobs were created last year. This morning people said they did not know where these jobs were, that they could not find them in west Cork, for instance. I am not sure where they went but the posts were created, over 12,500 in health services, additional teachers, clerical support jobs in the educational sector and additional civil service posts in the Department of Posts and Telegraphs, the prison service and the Revenue Commissioners. These posts required to be filled because of lack of staff and they are not just short-term jobs for a few weeks.

In the building and construction industry over 5,000 jobs were created, and again more could have been filled last year but for various industrial disputes which took place. I was very interested in 1977 and right through last year in youth employment, in which there was a major advance last year through the youth employment programme. Four broad headings were set out. Job creation for youth would be under the Employment Action Team. They set up work experience programmes, the environmental improvement scheme and the recruitment of construction industry apprentices by local authorities and the Ballyfermot survey established to try to find out exactly what the problems were. A total of around 4,000 jobs were filled in 1978 under these schemes.

In addition, the Department of Education embarked on temporary work projects which resulted in a further 1,200 people being employed. Perhaps it was under this scheme that those who built that famous wall in Cavan were employed. Those young people were learning something and it is unfair to criticise the scheme because that wall fell down. Deputy Fitzpatrick felt that it was wrong to employ such young people on such a job but in my view they gained valuable experience from this work. Many young people who in 1975 and 1976 did not have any work and took to vandalism found useful employment under the schemes. Those engaged in environmental projects learned how to appreciate local facilities.

Under the employment incentive scheme about 7,000 new jobs were provided in the catering and shoe and leather industries. A total of 25,000 new jobs were created last year but we must remember that a great number of young people come on to the labour market annually and we will continue to have that problem for many years. A massive number of jobs will have to be created to ensure that more school-leavers are given work. All those who do not go to university cannot be given jobs in offices or industries and many of them will have to be content with the more mundane jobs. We must do something to make those jobs more interesting. I had to do the same when I left school and I believe there are many young people who would be glad of such a job.

The Government have set a target in relation to the number of jobs to be created over the next few years and in the budget granted about £130 million to the various organisations involved in bringing industries here. It is the intention of the Government to fill 700 more posts in the civil service which includes 500 extra gardaí. It is unfortunate that because of the continuing rise in crime we must employ more gardaí but it is necessary to have more men on 24 hour patrols. I also welcome the decisions to increase the number of youth employment officers and provide more training centres for AnCO. It is important that our young children are properly trained when leaving school.

The Minister, in the course of his speech, spoke about the cost to the State of large increases in public sector pay. We are all aware that big increases are being sought in the private and public sector, increases which cannot be given under any circumstances. We can only take out of the national cake what is in it and people must accept a fair standard of living. Many of the applications for increases are not just to hold a certain standard of living but to improve it. Inflation last year was in the region of 8 per cent but wage increases brought forward from previous years led to increases of 16 per cent. Unless we are hypocritical about the idea of full employment, are happy to see our neighbours out of work and are happy to see the national debt at such a high level, we should stop people seeking such big increases. Many people will realise that big increases are not on and will accept realistic ones.

The trade unions have stated that those in receipt of social welfare benefits will have to be looked after because they suffered a lot over the years due to inflation. The Government's main priority in the budget was job creation but second in importance was improving social welfare benefits. That category can never be dealt with satisfactorily but I was pleased to see those on long-term benefit being given an increase. Those in receipt of such benefits never have a good year or sufficient finance to buy items which some workers can by working overtime. People in receipt of social welfare benefits are debarred from doing anything like that and when inflation rises their position worsens.

What has been done with children's allowances is very fair. Previously, the rich man who earned £40,000 or £50,000 got the same amount of children's allowances as the man with three or four children, who is trying to educate them and is paying for his house. That was a ridiculous system. This change should have been introduced years ago. An Opposition Deputy mentioned that there was no increase in children's allowances last year. There had not been an increase in children's allowances for a number of years; this did not happen only since Fianna Fáil took office.

It has been mentioned that the increase in children's allowances stops at the third child. This seems to discriminate against the large families. Perhaps this happens in a number of countries but I do not agree with it. Under this budget the allowance for the third child was increased from £4.85 to £5.50. If a person has five or six children, has one at a third level institution and another one or two at second level institutions, he may need help. I do not see why the increase should not continue to cover the fourth or fifth child.

The elimination of discrimination against married people was shown in the budget by the doubling of the number of days they could claim unemployment assistance. This was a glaring anomaly but unfortunately it takes time to get rid of anomalies. The Government subscribe to the policy that within six years all these discriminations will be eliminated.

The new pay-related social insurance scheme will assist the lower paid workers. Some of the worst paid workers in this city are those employed by contract cleaning companies. These people have been exploited. They are usually single parent families, widows and so on who work for miserable sums such as 55p an hour. Their cards are stamped and they must pay the full stamp. They will benefit significantly from the fact that in future their social welfare contributions will be a percentage of their salary and this will give them a significant increase in their pay packets.

Every year people watch the budget with great interest to see if the tax spread is fair. People seem to have forgotten that the tax concessions granted last year are carried forward to this year and they must be paid for out of the Central Fund. Last year, they cost £130 million, as well as rates abolition and motor tax. This year while increases are not as substantial, a single person or a widow is receiving an extra £250 and a married couple £500. When one takes into account the tax concession on a mortgage of £10,000 or £15,000, one realises that a person's tax free allowance could be in the region of £4,000. I do not have the average earning for 1978 but taking into account the fact that the first £1,100 will be taxed at 25 per cent, the tax paid by the average middle class person is not very great. It must be remembered that these people no longer pay rates or car tax.

I do not agree with people when they say that the working man needs his pint. He has the choice to continue to buy the same number of pints each week or he may buy a pint or two fewer. In the case of direct taxation he does not have a choice. It is taken out of his earnings.

The special allowance given to one-parent families—widows, separated and deserted wives, unmarried mothers—is very welcome. Over the years these people have been looked down on but in the last few years people have come to realise that they are as good as anyone else. They find it very hard to make ends meet. They will now get an extra £250 tax free allowance.

During the past week I have spoken to a number of people who are lucky to be employed in companies where they can borrow at low interest rates—up to four times their salary at an interest rate of 3 or 4 per cent that is, banks, insurance companies, motor insurance companies and so on. These people are entiled to hold on to their perks but it is also to be welcomed that these categories will be made equal. Everybody cannot get low interest mortgages and it is nonsensical when such people equate themselves with civil servants while ignoring the fact that while they may have the same salaries they have mortgages at very low rates. Those are big perks. Take, for instance, the people on mortgages. One person working in a particular job pays £30 or £40 per month while another person who has the same size loan can pay up to £100. That is a glaring anomaly and a very unfair situation.

There were various incentives given in the budget which we hope will create the employment we need. The basis of those incentives was to stimulate enterprise and create the climate in which the business world could plan ahead with competence. Various reliefs were given to individuals and companies such as the increase in the profits threshold for Corporation Profits Tax, the improvement in the three year scheme of the 25 per cent incentive for manufacturing companies and the 10 per cent which will replace the present export sales relief. All of those things are direct incentives to industry. I said last year that I hoped that industry would not get anything without paying something and that anything they did in this regard would be up to the standard expected by the Government. I say again this year that no businessman should receive anything without paying something.

The public sector cannot again carry the number of jobs created in 1978. The private sector must come up with the figures or it is a lost exercise. As well as the direct incentives given there is also a massive increase in the expenditure allocations for industrial promotion and the various moneys spent on infrastructures.

Many speakers have mentioned farmers' taxation and I am sure many more will mention it before this debate is over. I do not believe that every city person can be accused of not knowing enough about farmers' problems. I have been involved in a farm on the outskirts of the city. I know that many rural Deputies do not think such things exist. I did not know anything about profits because we did not even own a shovel in the farm but I was still able to see how things worked and always assisted in the work. Some farmers in rural areas think that because times were bad in the past they have some God-given right to be freed from having to pay tax. The same applies to other industries, such as small builders and factories where production was small and it was hard to generate enough profit. People working in those types of industries know that up to the late Sixties they had to put up with very small earnings.

All workers in the city pay PAYE. This system was devised to ensure that they paid their fair share of tax. Those workers have accepted that and there have been no demonstrations against it or efforts to try to evade paying that tax. The money was taken away from their earnings. I do not want to be considered as being anti-farmer in relation to this because I understand their problems. It does not take away from the fact that 5 per cent of their overall tax is taken in taxation while nearly 20 per cent of the salary of PAYE earners goes in direct taxation. Opposition speakers keep on talking about the 2 per cent levy on farmers which, as far as I am concerned, is only money collected from them to run additional educational facilities and other services for them. The amount of money that will be collected from them is only a pittance when one compares the cost of running those services. A total of £16 million will be collected towards the cost of £160 million which will be paid for those services.

Those services are being paid for at the moment by the money collected from agricultural exports and by the money collected from PAYE earners. It is fair enough for Opposition speakers to speak against the 2 per cent levy, but it is not fair of them to say that they are against the overall taxation of farmers without qualifying that. They should say if they think the amount which farmers will pay this year should be reduced or if the PAYE earners should continue to carry the burden. They should say if the overall percentage taxation of farmers should be reduced and the amount paid by PAYE earners should go up.

A figure of £380 million is expected to come from the EEC this year to assist agriculture. This is badly needed. I am totally in favour of any extra money received from the EEC to help them but I believe there should be an equitable distribution of tax. If farmers are not earning much they will not have to pay much. There seems to be a fear that once people get a look at farmers' records everybody will know exactly what their profits are and this levy will be increased.

I understand the difficulties which Deputies who come from farming constituencies have to face, but they should also understand the difficulties which people in the city have to face. Farmers are not the only people who gain by tax evasion. Many people in the professional classes are getting away with blue murder such as doctors, dentists and solicitors. I do not believe that people will come along and tell of individuals in that category who are evading tax. If people who are willing to tell of those evading the tax were given some incentive and the Revenue Commissioners traced the matter I believe the system would work. Perhaps something could be done by giving an increase in the personal tax allowance. If a person who had his doctors' or solicitors' bills sent those to the Revenue Commissioners or sent insurance receipts or mortgage receipts to them and was allowed have this as an expense on his tax free allowance a lot of those professional people would be caught.

Debate adjourned.