I move:
That Dáil Éireann, aware of the serious economic mismanagement of the economy by the Government and of the major increase in inflation in 1979 which is now projected at 13 per cent for this year and further aware of even larger price increases in certain basic food commodities, emphatically calls on the Government to restore food subsidies, so that the living standards of those most affected by this regressive policy, namely, the poor, the elderly, the unemployed, the underprivileged and large families, are not further eroded.
I understand that the motion and the amendment to it have been circulated. In January last the Labour Party tabled a motion for Private Members' time, deploring the decision of the Government to phase out food subsidies, thus increasing the price of butter by 8p per pound, the price of milk by 2p per pint and the price of flour by 3p per kilo. At that time we pointed out strongly that that type of policy inevitably would have an adverse inflationary impact on the living standards of the poor, the elderly, the unemployed, the underprivileged and on larger families in particular. At that time we were experiencing an inflation rate of 7.6 per cent but today that figure has almost doubled. This is at a time when, though we are not aware yet of the final decision on the part of the Government, there is a prospect in the next budget of the second stage in the phasing out of food subsidies. It is logical to assume that if the policy to phase out food subsidies is to be continued, the final phase in this respect is imminent. Therefore, we have tabled this motion so that the public, concerned social organisations, the trade union movement and in particular that large body of marginal Deputies, the Fianna Fáil backbenchers, might impress clearly on the Government the need to end this regressive policy.
When we tabled the motion before the House now—that was during the summer recess—the annual rate of inflation for this year was projected at 13 per cent, but since then the best available forecast indicates a figure in the region of 14 per cent. In addition, there are increases in the pipeline. For example, it is anticipated that there will be an increase in the price of electricity. I understand there is a further recommendation before the Government for an increase in electricity of some 16 per cent plus a 2½ per cent fuel variation charge increase. Such an increase would give a spurt to further inflation in respect of every household. Only this week the OECD stated that the Irish price level increased at an annualised rate of 15.5 per cent in the six months to August, 1979. The average rate of inflation in the Community in the same period amounted to 11.4 per cent. Therefore, we can assess clearly the impact of imprudent domestic Government policy of which, in part, the withdrawal of food subsidies was an element.
In our motion we refer to the serious mismanagement of the economy by the Government. Apparently this year we shall have a budget deficit of some £500 million or almost twice the level projected by the Tánaiste in January last. Even in the crisis days of 1973-74 when the price of crude oil quadrupled, I suggest that the previous Government exercised at least some prudent management of the State's finances or intended to do so in circumstances which were drastically more stringent and difficult than those facing the Government today. It seems that our rate of borrowing will now be of the order of 13 or 13½ per cent of GNP. This situation, as we resume this Dáil session, emphasises the confetti money policies being followed and shows that our national Exchequer finances are in some disarray, if not in ruins, while Ministers seek to shift their responsibility to all and sundry.
Admittedly, there has been a measure of improvement in the employment situation but the unemployment figure remains at 85,000. To that extent one might say that the Fianna Fáil election targets have not been met even to the extent of half what was promised. But then we had what can only be called the immortal words of my constituency colleague recently who, as reported in the newspapers, advised us not to be too obsessed with arithmetic. Regrettably, the arithmetic cannot be regarded as pleasant reading. However, it is indicative of a situation that must be emphasised to the House on this our first day's meeting after a, presumably, not too exhausting three-and-a-half month's holidays, something which the rest of the population did not have the opportunity of enjoying.
Regardless of what view one might have about the success or otherwise of the counter-inflationary policies attempted by the previous Administration, we at least introduced, as one of our counter-inflationary measures, what were then substantial subsidies on food. The subsidies applied to flour, bread, butter, milk and town gas. In addition, in the budget of 1975, we removed value-added tax from food. The effect of this was no less than 4 per cent on the consumer price index. The subsidies were extended further in 1976-77. At that time, despite raging inflation we took the unprecedented step of maintaining and improving the living standards of the unemployed, the elderly and other vulnerable groups. Today we have an inflation rate of 14 per cent. The FUE who are not known to give vent to exaggerated statements, estimate, on the basis of the best forecast available to them, that the inflation rate is 14 per cent. Some commentators estimate the rate as being of the order of 16½ per cent. The recent annualised rate from the OECD is of the order of 16.5 per cent. Whether or which, there is the inescapable conclusion that the 12 per cent which was given in weekly rates of short-term unemployment welfare payments, the 16 per cent increase given last January to long-term recipients and the rather miserly £1 increase given this month have been eroded by inflation. In many instances, these moneys were received a month late by recipients.
On top of that, we had the removal of the food subsidies throughout this year. One of the major beneficial effects of providing food subsidies is that they can be used to contain and reduce the rate of inflation, as the previous Administration did. To mid-November 1978 the annual inflation rate was 7.9 per cent. The removal of the food subsidies contributed at least 1 per cent to the inflationary impetus, and 2½ to 3 per cent to the food price commodity group at that time. To mid-August of this year the consumer price index shows an inflation rate of 13.6 per cent. It is interesting to note that the UK based Reward Regional Surveys indicated an inflation rate in the Republic of 16.7 per cent at present, with Irish prices some 11 per cent higher than UK prices.