Dáil Éireann debate -
Wednesday, 24 Oct 1979

Vol. 316 No. 4

Private Members' Business. - Management of Economy: Motion.

Mr. Kelly

I move:

That Dáil Éireann deplores the Government's economic mismanagement, which has resulted in the credit squeeze and in a general loss of confidence in agriculture, industry, construction, and other parts of the economy.

I said in the Dáil last week, perhaps in a disorderly way, that it was disgraceful that the Government had not been able or did not wish or were afraid to make time out of their own resources for this debate, not because there is any special merit in the form of words which Deputy Peter Barry and myself used in putting down this motion but because it is high time that the economy received a full debate in this House, not in the limited form of a Private Members' Motion heard by whatever Deputies and members of the press and public are still around at an hour in the evening when the possibility for coverage has largely disappeared and in which speakers are limited to a length of time which makes it impossible to do justice to a subject of this kind. I contrasted the behaviour of this Government in this regard with the behaviour of the Government for which I worked which, in circumstances of Dáil pressure no less exacting and in my recollection a good deal more exacting than this Government now face, made time in November 1976 for a debate of this sort which occupied many hours on three separate days. The House and the people, if they are interested in such matters, can draw their own conclusions from this act of contempt or of cowardice. I am not sure which emotion—if it is an emotion—is uppermost.

I remind the House that the Taoiseach did not deny yesterday the information I passed to the House that we will get a White Paper towards the end of November. That means that he will be more or less forgiven if it is a week or ten days late and does not appear until early December. The House should understand that this would make it impossible to have a debate on the forthcoming White Paper before Christmas unless that debate is to be taken together with the Adjournment Debate. That would be an unfair and unsatisfactory solution. In an Adjournment Debate, in which time for most speakers is limited to 30 minutes as a rule and 45 minutes at the outside, every possible aspect of the Government's work or lack of it needs to be discussed and not merely the economy. To expect this House to debate the White Paper in the context of an Adjournment Debate, when no other opportunity will offer for a full debate on the economy before the budget some time in February, is forcing this House to neglect its duty in this regard. The Minister for Finance knows perfectly well that by taking this line the Government have succeeded in their objective of trying to distract Dáil attention and to that extent some part of public attention from the position of the economy, to the poor state of which he himself in late months has repeatedly testified, as has the Minister for Economic Planning and Development.

These two Ministers get a certain amount of sympathy from me, though perhaps they do not want and do not value it. I have some sympathy for them because at least they are visible up on deck. They are like the captain and first mate on the conning tower of a submarine and are visible for as long as the boat stays surfaced. On the other hand, I have nothing but contempt for their colleagues on the front bench or on the back benches who are trying to distance themselves from the mistakes this Government have made and are trying by whispers to say, "Well, of course, that's O'Donoghue. We ought never to have bothered with an academic like that. We ought never to have listened to him. He has led us all astray. He has Jack by the ear". That kind of talk is contemptible from men who were perfectly willing to take the benefit of the Santa Claus advice that the same Minister, Deputy O'Donoghue, was handing out two-and-a-half years ago when they were preparing their election manifesto.

In those days that refugee from the Muppet laboratories, Dr. Bunsen, was telling them that they could do away with major sources of public revenue, that they could scrap major sources of public taxation, that they could hand out to the people relatively enormous sums of money to spend the way they please and that they could do away with many of the restraints which the National Coalition had been obliged to impose, which they had painfully struggled through and for the imposition of which they paid the penalty. They were very happy to go along with the sunburst period, happy to believe that ground rents and rates could be abolished, that car tax could be abolished, that tax concessions could be given on all sides and very happy to believe that this would generate economic activity so enormous that the revenue buoyancy would solve all problems and that jobs would drop out of the skies. They were happy to believe it then but a different tune is now being played and a different face is now being worn by these gentlemen.

The responsibility for the economic chaos in which this country now finds itself rests not just on the Minister for Finance, though I am sure he would resent and repel the idea of being defended by me. It rests not just on him or on the Minister for Economic Planning and Development. It equally rests on those other geniuses, the former Minister for Finance, Deputy Haughey, the Taoiseach, Deputy Lynch, the bluffmaster general, Deputy Lenihan and all the other members of the Government who were perfectly happy to take the benefit of the advice they were getting from this academic import from Trinity College in 1977, but now do not want to be stuck with it and feel that he can be used as a scapegoat.

If I may introduce a premature note of levity into a serious subject, it reminds me of one of the favourite film clichés of my childhood when that imperishable pair, Laurel and Hardy, were alive and flourishing. Whenever some appalling disaster occurred in their lives, invariably the fault of Hardy, he would always turn to his simpering colleague, Laurel and say, "There is another nice mess you have got me into," thrusting the blame onto the member of the pair who was blameless. The Minister, Professor O'Donoghue, is not blameless but he is not very long in the tooth politically either and although I am an academic myself he has lived a bit longer and a bit more intensively in ivory towers than I have. Though I believe he led his party by the nose in the wrong direction, that party willingly went along with him. I believe he is a man of decency and integrity even though he is unreal—his feet simply are not on the ground in most respects. It would be a scandal if the blame for the situation in which we now find ourselves is allowed to be deposited at his door alone or at the door of the Minister for Finance alone. He is no more to blame than the rest of them either. The latter Minister is a member of a Government about whom I have mixed feelings. There are times when he is good and he is very, very good and there are other times when he is bad and then he is horrid, like the little girl with the curl.

I was amused, when thumbing through the enormous elephant-load of literature which the Government Information Services are good enough to favour me with every afternoon, at the address which the Minister gave to the insurance brokers of Ireland on 18 October last. He invited the plain people of Ireland, and in particular the working members of the plain people of Ireland, to take a leaf out of the book of the Germans. He stated:

No one will deny, however, that we have something to learn from the distinguished visitor who was our guest earlier this week, the Chancellor of the Federal Republic of Germany. In the years since the war Herr Schmidt's countrymen have demonstrated to the whole world what can be achieved by approaching problems in an orderly and sensible manner. They have done this without sacrificing essential freedoms or without inhibiting in any way the scope of their trade unions to work for the betterment of their members. Their reward is one of the highest standards of living enjoyed by workers anywhere.

Perhaps I am the first man in the history of this House to speak in total darkness——

Mr. Colley

We will miss the expression on the Deputy's face.

Mr. Kelly

——And remember, they had to cope with oil price rises and world-wide recessions like everyone else.

The thing I found engaging about that paragraph was the idea that there is some comparability between the atmosphere of public, political, economic and social life in the Federal Republic of Germany and here. I have been—not by design but accidently—in Germany during two general elections to the Bundestag as well as during the European election last May. The kind of invitations, solicitations and allurements held out to the Irish people by the Minister's party at the election two-and-a-half years ago would have been regarded with contempt by the humblest German tram driver. I will not say by an unemployed tram driver because there are not too many of them around. The humblest coal miner or tram driver would have regarded the Fianna Fáil manifesto as an insult. He knows what the game is about. He knows what are realities. He knows wealth cannot be produced out of the sky. He knows he cannot improve his standard of living simply by casting a vote. We are supposed to imitate the Germans. It is a good job Chancellor Schmidt was not shown the manifesto and asked for his opinion about it. It is a good job he was not shown the advertisements about the abolition of ground rents, of rates and of motor taxation. The Germans know what it is to do a day's work, a week's work and a life's work. They have got leaders in the past 35 years who do not fool them and lead them by the nose. For the Minister for Finance to invoke the Germans when he is the second in command in a Government who conducted such methods as put them in power two-and-a-half years ago should cause him to be ashamed of himself.

The story started in the early part of 1977. It continued when the Government inexorably and unavoidably, because of the necessity of fulfilling their election promises, or appearing to fulfil as many of them as could quickly and easily be done, worked themselves into an impossibly tight corner in regard to revenue. I shall come back to this point next week when I am closing the debate. Revenue is the central and the single most important point, it is the point at which the lever and the crowbar have to be inserted into the rock-fall which the Fianna Fáil Government have strewn on the road.

The first thing they did was to leave themselves in a hopeless jam from the point of view of revenue by abolishing sources of revenue, not only those that were large and important and could not be replaced readily, such as rates and to a lesser extent motor taxation, but revenue which may not have been financially significant but which was symbolically very important, such as the capital taxation system which the National Coalition introduced. By that comprehensive bungling not alone did they leave themselves in a situation which they are now desperately trying to pick themselves out of in regard to getting money to finance the public services but they left themselves with a population alienated, particularly the very section whom the Minister for Finance, dinner-jacketed and sitting at a table covered with flowers and bottles of brandy, is appealing to in regard to wage moderation.

What are they expected to think when they hear the Minister preaching wage moderation? Although I know that he himself is a man of frugality and has no respect for people of a different type—I acknowledge this and I am not sneering at him—how does he think people will take that kind of appeal when they find the Government have done away with the capital taxation system which even though it may not have brought in very much money visibly made it apparent, as his own tax officials have said publicly, that an attempt was being made to throw the burden evenly on all sections—and by evenly I mean that it would weigh heavier on those better able to bear a heavy burden. He expects wage moderation from a man who scarcely knows how he can pay to have his son's shoes repaired, which nowadays can cost £6. Wage moderation is to be afforded in the national interest because Pearse and the dead generations expect it. Wage moderation is to be shown by a man of that kind while he sees the tax exiles coming home from the West Indies with tans, exulting because Fianna Fáil are back in power.

That comprehensive bungling has cost this Government and the country dear. They are not at the bottom of the pit yet; they have some distance still to go. The result was that last year and even more so this year, there is a national understanding which is far more generous than the country can afford, as the Minister said last week. It is not a settlement any longer, it is an understanding. I realise there are dimensions in it that go beyond mere wages but the Minister belongs to a party who think a pretty name will cure anything, that it will transform the nature of something which is in essence only a deal like the others. It has some extra elements in it and I am glad there is such a thing as a comprehensive national settlement but this one is too generous. I am not going to lecture people who are getting something out of it, particularly those low down in the economic heap, but it is too generous and the Minister knows this. He knows the reason it is too generous is because of the conduct of his Government in their taxation policy, in phasing out food subsidies and in the awful, cowardly bungling about farming taxation at the beginning of this year. He was asking for it. If he had set out to get an extravagant wage agreement he could not have done it more effectively.

I admit it is not an endearing thing to do, but if ever a party were entitled to say "We told you so" this party can take that credit. Since the election campaign we said what would happen if the programme announced by Fianna Fáil and which they pursued to a great extent continued. I know there has been an Iranian revolution and I know that counts for a lot even though the convulsion in oil prices which it caused was nothing like the convulsion caused in 1973-74. It is supposed to be an excuse for the Fianna Fáil Government but there was no excuse for us. I sat in this House and listened to speeches from Fianna Fáil when they were in Opposition assaulting the then Government. The oil crisis of 1973-74 was never mentioned but now a much less serious crisis, one that did not take the world unawares because the world had suddenly woken up to its vulnerability to unstable oil prices, is supposed to be the scapegoat for everything. It is true we did not foresee the oil crisis in Iran but in the past two-and-a-half years we warned the Government about where they were going and, unfortunately, what we have seen has amply borne us out.

I do not want to offend or upset the Minister for Finance or work him into high gear earlier than is necessary—I am sure we will see him doing his windmill act before the evening is out —but I must point out that we began the year with a phoney budget. I am not a financial expert but I followed as well as I could the passages between him and the leader of my party earlier this year. I still think it was a phoney budget. It began with an estimate of revenue based on a ridiculously optimistic assessment of the growth rate, far in excess of anything coming from independent bodies. Even now the Government are saying that the growth rate for this year can be expected to be 4 per cent or thereabouts when everybody else is saying it will be 2 per cent or even 1 per cent. They ignored all objections to the budget's internal inconsistencies, all objections to the expectation of huge revenue buoyancy at a time which was supposed to be one of diminishing inflation. Inflation was going to go down but revenue buoyancy was going to go up and there was going to be a moderate wage settlement. Still, huge revenue gains were expected.

Sufficient account was not taken of the strain that was going to be imposed on the Government by their own wage bill, by the settlements that the Government were going to be engaged in and by what they were going to be forced to hand out notwithstanding what the Minister frequently pointed out, that an increase of 1 per cent in the public service pay bill means an extra bill of £10 million. Of course the bill is more than that now because the increase is calculated not on a fixed sum but presumably on a given sum in any one year. The last time the Minister mentioned it, it amounted to a round figure of £10 million. These awful figures were not taken into account in the Government's planning and we now find that the borrowing requirement for this year will for the first time go over the billion pound mark.

Three or four years ago there was empty laughter from these benches, about how we were putting ourselves into hock. They said that we were hocking not only our own future but our children's future and that there would not be the price of a bag of cement left. That was in the depths of the recession when the National Coalition at their worst borrowed less than half what the Minister will have to borrow this year. This is a Government that is supposed to plan. They have been planning their borrowing requirements not just from year to year but well in advance. We were told two years ago what the borrowing requirement would be for this year but that has now gone out the window. The Minister for Economic Planning and Development, Dr. Bunsen, gave an explanation in relation to the borrowing requirement on this occasion.

An Leas-Cheann Comhairle

It would be wiser if the Deputy referred to Members of the House by their proper titles.

Mr. Kelly

The Minister is big enough to take a bit of jocularity, and that is about all he is entitled to.

An Leas-Cheann Comhairle

The Chair does not know whether it is jocular or not, especially when Deputy Kelly is speaking.

Mr. Kelly

Dr. Bunsen is a character in television fiction who every week thinks up an answer to tomorrow's problems today. None of them work; they all fail not at his expense but at the expense of his assistant who gets his ears blown off, while he remains smiling to the end of the programme and comes up the following week with some other crazy plan.

Dr. Bunsen produced these figures and we must assume——

An Leas-Cheann Comhairle

Sorry, Deputy, there is no Dr. Bunsen in this House that I am aware of.

Mr. L'Estrange

There is somebody very akin to him.

An Leas-Cheann Comhairle

Deputy L'Estrange will keep out of this argument. Deputy Kelly should address Members of the House by their proper titles.

Mr. Kelly

The Minister for Economic Planning and Development, upwards of two years ago, told us what the public sector borrowing requirement would be in percentage terms expressed as a percentage of GNP, and we were told frequently that although there would have to be an initial spate of borrowing in order to get the Bunsen machine going, that would then be steeply cut back because we could not sustain borrowing at that level. Where are these resolutions now? Last week the Minister for Economic Planning and Development said in relation to the need to scale down borrowing progressively, that there is no ideal or necessary level of borrowing for any country and that this was only a fiction. I hope the Minister will not be offended and that the Chair will not get excited if I say that that is the kind of looney talk that gets academics a bad name. How can the Minister expect to be taken seriously when for two-and-a-half years he has been laying down in advance the level of borrowing which we would have but now tells us that these figures might as well not have been written down. They were written in water or in sand, there is no such thing as a necessary or ideal borrowing level.

Another thing which contributed to the situation we find ourselves in is the trade situation. I have never whinged about being beaten in the last election. I put it behind me within an hour. I would have been upset had I lost my seat but I took the political defeat of the Government philosophically. I recognised that the National Coalition Government, being merely a lot of over-worked men of flesh and blood, made mistakes. I recognised that we had made ourselves unpopular for a variety of reasons for some of which we were undoubtedly to blame. At the same time when I looked at the kind of material which people were being offered, I had to pick out things which were advanced not as absolute predictions but as likely predictions. We were going to have a "Buy Irish" campaign but it was never quite explained in what respects it would differ from previous "Buy Irish" campaigns. I am not trying to belittle the "Buy Irish" campaign or the people who run it because they are doing their best. I pay tribute to Deputy R. Burke who seems to be out nearly every night of the week trying to push this thing forward. I salute him because he is not trying to duck these awful jobs and he does his best with them. The idea that one can predict, as did the Fianna Fáil Party, that 3 per cent of consumer spending would be switched to home-produced goods is ludicrous. This was a figure plucked down from the shelf of the Bunsen laboratory and 10,000 jobs were supposed to have been created by this means. I do not know about the job creation aspect of the imports substitution; all I know is that far from imports being cut, they went out through the ceiling. When people found themselves let off rates and motor car tax and were given tax concessions which the country could not afford and which the Minister would be ashamed to tell Chancellor Schmidt about, they spent the money on motor cars and largely on imported consumer goods. The trade deficit over the last 18 months has notched up record after record and has now broken the billion pound record just like the borrowing requirement. When we subtract the other forms of inflow which do not show up in trade figures that means that the general balance of payments is also at a record level. When asked if this had some bearing on our prospects of maintaining our currency in its present situation in the EMS, I heard the Minister for Finance saying that the balance of payments situation was only one of a number of factors.

Mr. Colley

The current deficit.

Mr. Kelly

If we find a crock of gold under Deputy Colley's rainbow, that no doubt will be a help and if Dr. Bunsen can find gold in the Liffey that will be another one, but at the moment the balance of payments is the main index which other people use—financial experts that I am not qualified to criticise. The balance of payments has an immediate and drastic effect on the status of one's currency and no one should know that better than the Minister. The Minister is almost in the Doctor Bunsen class when he says as he did yesterday that it is not a worrying factor in regard to the status of our currency. It is a worrying factor.

Mr. Colley

If the Deputy wants to make a point will he quote me, please?

Mr. Kelly

We cannot maintain a deficit of this kind.

Mr. Colley

The Deputy is misrepresenting me.

Mr. Kelly

We cannot maintain a balance of payments deficit of this kind and still hope to maintain our currency situation inside the EMS. It just cannot be done and the Minister knows that.

That brings me to another matter which was in the forefront of this motion or the pivot on which this motion rests, the credit squeeze. With all the difficulties I have outlined a credit squeeze could still have been avoided if Government borrowing had been kept within limits. I have the White and Green Papers of 1978—we are still waiting for the 1979 Green Paper which has sunk without trace—and both those papers emphasise the absolute necessity for controlling the growth in public spending. Where is the control in the growth of public spending? The national understanding of which the Minister is so proud provides that if the public sector do not produce jobs, the Minister will produce them. There was a time when people with the Minister's job, in the 1920s under Cumman na nGaedheal and in the 1930s and 1940s under Fianna Fáil, boasted to this House that they had kept the size of the public service within limits and apologised for increases in the public service. I am referring to non-industrial civil service jobs when I say that the civil service is almost twice the size it was in 1959 which is not that long ago. That was the year of the first Fianna Fáil attempt to do away with PR, it was the year in which Deputy de Valera was first elected to the park, the year when Deputy Lemass became Taoiseach. In that year there were only 28,000 non-industrial civil servants. In that year there were only 28,000 civil servants in the non-industrial category; there are now 52,000. Do not tell me that the output of the civil service, the range, the quantity and the size of the jobs they do have almost doubled in 20 years. I do not believe it. Some sections of the civil service such as the Land Commission must have less to do than they had then.

When I asked another question yesterday I found there is not a single section of the civil service that has a smaller personnel now than it had in 1969, let alone 1959. If there are departments in the civil service or the public service which are undermanned let us employ people for them because they are undermanned but let us not build offices, put in desks and push people down behind them just to make jobs. That is demoralising and expensive. It is a drain on the nation. Let the Minister not tell Chancellor Schmidt the next time they meet that is how he solved the employment problem. Do not tell him that you make useless, pointless, demoralising jobs for the sake of appearing to create employment. Chancellor Schmidt would have something to say about that and the German unions, if the Minister owned up to it, would be at one with us in regarding that as a ridiculous, infantile and unforgivable waste of public money and national resources.

Let me recall the day Deputy Lynch became Taoiseach in 1977. In his acceptance speech he harped eloquently on the need for public service and civil service reform. Political will was needed here, he said. Where is the sign of it? All we have is a series of changes, nominal, cosmetic changes in what used to be Parliamentary Secretaries. They are now much grander—Ministers of State—but they are doing the same job and it takes ten of them to do what in our time five did. Where is the reform in the public service? Would the Minister tell us some time in regard to economy in public expenditure what operations are on foot at present to make sure that he is getting what I may call full value out of the 52,000 people he is employing as Minister for the Public Service, that these staggering wage bills which they involve are justified—40p in every £1 of revenue goes on the public pay bills, not to speak of the 21p in the £ that goes on paying interest on the public debt? Is he satisfied he is getting full value for that? These are the things he should be looking at. I know it will cost him votes if ever he has the courage to do it. It will be unpopular. He will have a lot of carping and snarling but as the Taoiseach spoke on 5 July 1977 about the necessity for political will to do these things, let him show that political will.

These are the circumstances in which a credit squeeze has become necessary. So far from cutting back on public services—I want to make clear that by no means do I recommend cutting back on a certain range of public services, the social services which help the needy sections of the population—instead of doing some pruning, keeping some eye on where State money is being spent, so far as I can see there is absolutely no visible control at all. The reckless and remorseless expansion of the Government's demand for money has left the private sector strapped for credit. That will shortly be reflected in increased unemployment. I admit I used think at one time that Fianna Fáil were almost a different race from the rest of us, that so far from being a party they were a kind of miasma and that you could not be a member of it without being half way to being a devil, certainly somebody not believing in the national interest. I have become wiser since then and I know that the party is full of people who are hardworking, decent, patriotic and so on and I regret many of the things which I said along that line in my earlier years. I do not think that now but their greed for power, their sick greed to sit in Mercedes and to swank around the country has left them in a situation where they made election promises which infallibly led to the position in which we now are.

I do not know if the Minister can sleep at night; I do not want to make personal remarks about him but I think if I were in that situation I really would be desperate about where to find the money to keep this show on the road. It is not simply the credit squeeze although obviously that hurts. Even Fianna Fáil's friends in the building industry have complained about it and it takes a lot to make them complain when Fianna Fáil are in office. He will have to think of something which in effect will bring back rates or motor tax or both, or do something even more drastic. Either that or he must keep on borrowing to the point where the borrowing can only be repaid by selling off County Donegal or perhaps a couple of other counties also—some fantastic measure of that kind—or handing over the public finances into the control of foreigners which is the road we are already on.

After two-and-a-half years the Minister is in the situation that he is making up his own growth rate. None of the independent agencies agree with him. Inflation is up. When we left office the people were supposed to be groaning because of high prices. So they were. In the quarter measured by the date nearest to our departure from office, 5 July 1977, the year-on-year inflation—I am not talking about end of year inflation but about a year's inflation—the year's inflation was 13.5 per cent. The Minister knows that when the November figures are available by the end of next month or the beginning of December we shall find inflation is between 15 per cent and 16 per cent. I do not want to hear any more about the Coalition's high prices. We had got inflation down to 13.5 per cent; we paid heavily to get it down and it continued to fall thereafter because of our efforts. Now it is going through the roof again. The borrowing has reached a point never before reached, a point which former Ministers for Finance would have thought came from science fiction if they had been told of it 20 years ago. The job targets are not within miles of realisation. If the targets announced in the manifesto had been met there would be 50,000 fewer people now on the unemployment register, 5,000 off in 1977, 25,000 in 1978 and 20,000 this year. Even without seasonally adjusting the register the Minister will find a difference of barely 25,000; seasonally adjusted, it will probably be 22,000 or 23,000. And that is the only area where any kind of success can be claimed. Many of these 23,000 jobs are only apparent jobs, jobs which are not productive and which consume wealth instead of creating it.

Most of the disappearances from the live register must be attributed, and as the Minister for Social Welfare admitted this afternoon, to increased snooping, to getting the fiddlers off the dole. I am in favour of that but I would not call it job creation. The Minister has got himself into a desperate revenue situation. No matter what he does he will have a black eye. There is no way out of it and he knows that perfectly well. And this is the most serious part of the whole thing—he has left himself with a population which is twice as difficult, twice as exigent and demanding, twice as exasperated, twice as bloody-minded as the population which the Coalition governed for four-and-a-half years. Their expectations were raised and cast down. When did we ever preside over a march of 250,000 people protesting about PAYE? When were demonstrations of that kind ever seen in our time even though the people groaned under the recession, under the necessities which accompanied it and were produced by it? He has left himself with people who are not willing to be governed even to the extent that they were willing to be governed in our time. That situation which I have tried quite inadequately to outline this evening is the situation which the Minister's colleague, the Minister for Economic Planning and Development invites us to regard, as he did in an incredible speech ten days ago, as an economic miracle. That is the economic miracle. I wonder did he say that to Chancellor Schmidt who lives in the country of the economic miracle. When having a conversation with him, I wonder did he say: "By the way, I want to tell you for a few minutes about our economic miracle, about our growth, our employment position, our revenue situation, our trade deficit, our balance of payments deficit and our industrial relations situation". If that is a miracle I would like us to be let off any further miracles. We would settle for natural events from now on.

Minister for Finance (Mr. Colley)

I move amendment No. 1:

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

"approves the Government's economic policies and notes the progress which they are bringing about".

The performance of the economy in the past two years of our term of office was substantially in line with the course which we had charted, a remarkable achievement not only considering the difficulties, some of which Deputy Kelly was gracious enough to acknowledge as to their existence, but also having regard to the targets we set. In some quarters those targets were dismissed as being ridiculously ambitious and unrealistic. Gross domestic product in 1977 and 1978 grew by more than 6 per cent and that put us at the top of the growth league in the EEC and among OECD countries. Not even Japan, for so long the pace-setter, fared better than we did in this regard. Nowhere is the success of the Government's efforts to transform the economy and release the dynamic which exists in the private sector more clearly illustrated than in the buoyancy of investment.

In 1977 the volume of investment rose by 6 per cent and 1978 saw an acceleration to 15 per cent with private sector spending growing by an estimated 19 per cent. Such a commitment of resources was a massive vote of confidence not only in current economic policies but also in the longer term benefits of the Government's approach. The contrast with the previous three years is noteworthy. In 1974 and 1975 fixed investment actually declined and, despite a slight advance in 1976, its level was over 9 per cent below the 1973 peak. By 1978 it was over 10 per cent above that peak. That is a fair test in an area which is, perhaps, not terribly important to the man in the street but is very important in the long term. If we are to get growth and thereby be able to pay our way and create the jobs we need there has to be massive investment. That is taking place.

I suppose the area of greatest success as far as the Government are concerned is that of job creation. I will say something in more detail about that later but I should like to remind the House that in the last general election campaign we said that jobs should be the first priority. When we were elected we said that jobs would be the first priority of the Government and that we wanted to be judged by our performance in relation to the creation of jobs. When one is talking about the performance of the economy one must find it difficult to reconcile the facts as we know them, as we see them all about us, with the description we have had from Deputy Kelly and with the terms of the motion which speaks of the Government's mismanagement that resulted in a credit squeeze and a general loss of confidence in agriculture, industry, construction and other parts of the economy. How can one reconcile that kind of statement about a lack of confidence with the figures I have just given for investment? Such a statement does not stand up. How does one reconcile that with what has been achieved in creating jobs? More than 50,000 new jobs have been created. Although it is recognised that the live register is not an accurate measure, if one looks at that register one will see what the position was when the National Coalition were in office. If one compares it with the situation now one will see something of what has been achieved by the Government. We turned this economy round; we found it on its knees——

Mr. L'Estrange

That is not true. There was a growth rate of 7 per cent and the Minister knows that. All the Government had to do was to continue as we had been going.

Mr. Colley

The Deputy does not like to hear the truth but he will hear it. Deputy Kelly, when talking about job creation and trying to reconcile the figures on the live register, said that if our targets had been achieved the live register would have been reduced substantially more than it has been. The Deputy should know that every school leaver who gets a job does not mean a reduction in the live register. Will the Deputy recognise that the statement he made is not in accordance with the facts? The facts about the changes that have taken place are well known to most people.

All the indicators show what has been happening. Those indicators, subject to certain qualifications, show the upward trend we set out to achieve. These are qualifications in particular in relation to inflation. Despite what I regard as an unsatisfactory position at present in relation to inflation the fact is that the kind of inflation the country had to endure under the Fine Gael-Labour Coalition was absolutely enormous compared with anything that we are faced with now. The average increase in the consumer price index in 1976 was 18 per cent. In our first year in office we halved the rate of inflation compared with the one Deputy Kelly was boasting about. However, I do not regard the present position as being in any way satisfactory but there are factors involved in this over which we do not have control. There are also factors over which we have control.

With regard to the factors over which we do not have control, I should like to state that the oil price increase and the consequences of that increase, direct and indirect, and the consequences of the apprehension about the non-availability of oil, are quite serious and substantial. They are much more widespread than the direct increase in the cost of the price of oil which, incidentally, this year alone will cost us somewhere in the region of £120 million, and probably more. I know Deputy Kelly was dismissing it as of relative unimportance compared with what happened when his Government were in office.

Mr. L'Estrange

That is quite true.

Mr. Colley

Actually it is not true. The fact is—and this is the point I want to make—I maintained when the Coalition were in office, and I maintain today, and despite what Deputy Kelly said about speeches from those benches when we were in Opposition, if he casts his mind back he will recall that he heard me on many occasions from those benches saying: of course the consequences of the increase in the price of oil was a direct transfer of resources from this country to the oil producer and of course it affected us. But—and this is the important thing—I have always believed and still believe that the more difficult the situation externally the more we have an obligation within the country to do anything open to us to counteract the effects of the external difficulties that arise. And there are external difficulties because the oil price difficulty has come on top of an already downward trend in world trade, vitally important to a trading country like ours, and a recession in the United States.

Therefore, let nobody be under any illusions but that the external situation is bad and is more than likely going to get worse. That is a fact; we have to live with it. But despite that difficulty and all the difficulties we have had in the past year, self-inflicted in many ways in regard to the consequences of the industrial relations scene we can still, between now and the end of the year, by the exercise of reasonable discipline, achieve this year a growth rate of 4 per cent, very high by international standards. The remedy for the real difficulties that face us lies here, not abroad.

I have talked about the kind of things that have been happening. I am a little mystified, I must confess, at the references that have been made to various sectors lacking confidence, to gross mismanagement and so on. All of the indicators available show that, on the contrary, we have had a record performance in regard to cement sales, industrial production, investment and so on. The one grave misconception from which Deputy Kelly seems to be suffering is this—and it emerged when he was talking about the credit squeeze—that government spending has taken the money away so that the private sector—I think the words he used were—is strapped for money. I want to tell the House, and in particular Deputy Kelly, that he is quite wrong in that.

The fact is that the guidelines issued by the Central Bank relate to non-government spending and it does not mean that the private sector was in any way held back because of government spending, whatever that might have been. Last year, 1978, there was a guideline of 20 per cent; the increase in credit was 33 per cent. I am talking about the increase outside of government spending. Even in the early months of this year—on the revised guideline brought in allowing ample scope for increase in credit—again a great deal of the credit for the whole year was used up. I do not think anybody has to be a financial wizard to recognise the consequences of that if it were allowed to continue. This, of course, occurred this year when a decision in the monetary field, one of the major ones made in the history of this State, the one to join the European Monetary System, was taken. But I want to make it clear that had we never joined the EMS, on the figures I have given, it would have been necessary to tighten credit. The figures I have given, I suggest, speak for themselves.

Therefore, it is necessary to take steps to ensure that the rate of growth in credit is brought within limits the economy can support. The Government recognise that this is necessary in the interests of the good management of the economy and in the long-term interests of all our people. I want to make it clear that it is not the Government's intention, nor that of the Central Bank, in applying the credit guidelines, to bring about massive disruption and difficulty for any industry, and indeed that is not happening.

There are two areas about which I would be concerned, one in the more immediate term and the other in the slightly longer term. I refer first to the question of bridging finance and, secondly, to that of credit for agriculture. In those two areas the Government are watching the situation very closely. Within the overall requirement to get the rate of credit expansion back to a reasonable level those two areas are being watched with a view to ensuring that neither of the industries concerned runs into any major difficulties because that is not the intention. On the contrary the intention is to get expansion of credit back to a level where there is ample room for the kind of growth we want to achieve but where there is not an explosion of credit which the whole of our economy could not support.

Sir, I have half-an-hour, is that correct?

An Leas-Cheann Comhairle

The Minister has 12 minutes left.

Mr. Colley

I believe that the Fine Gael Party were ill-advised to bring this motion before the House because I believe that the debate taking place on this motion and this amendment will enable people to contrast Fianna Fáil's handling of the economy in difficult circumstances with the manner in which the Fine Gael-Labour Coalition coped with the other oil crisis of the mid-1970s. Fianna Fáil are happy to see that comparison made. There are very many differences between the approach of the two Governments concerned, but the vital and enormous difference is in the case of jobs. Look even at the live register, incomplete as it is, in measuring the performance. Compare, say, October 1976 with October 1979 and you will get some idea of the difference in approach between the two Governments. In the two years since our coming to office we have created 50,000 new jobs and we have provided special job incentives and training schemes for youth.

We have been told about the borrowing we have done. Yes, we have done a lot of borrowing because we inherited a situation in which there was enormous borrowing, but here is another big difference between the approach of the two Governments. The unprecedented borrowing done by the Coalition was accompanied by growing dole queues. The borrowing we are doing is accompanied by shortening dole queues. We have something to show for it. No Deputy has to be a statistician to measure the impact of the achievement that we have in job creation. Whatever criticisms Deputies may hear around about the Government, any of their neighbours will tell them that it is a lot easier now for young people to get jobs than it was when the Coalition were in charge. In fact, this Government's performance in the field of employment has been spectacular. At no time since the establishment of this State has there been such a growth in jobs.

One of the shocking hypocrisies of Irish public life is the pretence by the Fine Gael and Labour Parties that they are the ones who care about the weaker sections of the community. The true measure of their concern was the length of dole queues when they were in office. They allowed unemployment to reach up to 116,000. That is on the live register, inaccurate as it is. Massive unemployment has been the hallmark of the last few Coalition Governments.

Mr. L'Estrange

The Minister should not be codding himself. I saw unemployment at 145,000 under Fianna Fáil.

Mr. Colley

I know the Deputy does not like it, but that is a fact. It is the hallmark of the Coalition.

Mr. L'Estrange

I can produce the figures.

An Leas-Cheann Comhairle

Deputy L'Estrange is not being at all helpful. If he does not want to listen he knows what to do.

Mr. Colley

We said that we would get this country up off its knees, and we have done that. We said that instead of throwing in the towel like the Coalition we would use our own initiative and resources to pull us up out of the doldrums, and we have done that. Indeed, many of the problems the country now faces are the problems of prosperity.

Mr. L'Estrange

The Minister will be throwing in the hairshirt shortly.

Mr. Colley

If Fine Gael were so anxious for this debate we might reasonably have expected that they, and Deputy FitzGerald in particular, would have come forward with some practical prescription for the problems we face today.

Mr. T.J. Fitzpatrick

(Dublin South-Central): They never had a plan in the last Government.

Mr. L'Estrange

After what happened in the Department of Posts and Telegraphs, when you could not even write a letter for six months, it is a wonder the Minister of State would open his mouth here.

An Leas-Cheann Comhairle

If Deputy L'Estrange does not want to listen, I ask him to leave the House. There is a very limited time for this debate.

Mr. Colley

I am going to claim extra time if Deputy L'Estrange takes up my time. Deputy FitzGerald might have told us how a Coalition Government led by him would deal with inflation. He might have told us how they would tackle the problem of getting a fairer tax system under which each sector would pay their fair share. He might have told us if Fine Gael and Labour would change their attitude towards jobs from what it was when they were in Government previously. Deputy FitzGerald has talked a very great deal but he has not said anything of consequence in relation to any of these problems.

One thing I can promise for sure is that whatever external difficulties we may face, this Government, unlike our predecessors, will not panic or throw in the towel. We will not wring our hands and tell the unemployed that we cannot do anything for them and blame it all on the Arabs as our predecessors did.

Mr. Kelly

Blame it on Deputy O'Donoghue and the Arabs.

Mr. Colley

A perceptive political analyst would find ironic Deputy FitzGerald's leading an assault on this Government's record in these days, even saying that failure to reach our targets means that our programme is in a shambles, when his targets are not forecast. I tell the House that the country would have been crying out for the kind of failure and mismanagement of the economy under this Government. If the people could have got this kind of mismanagement under the Coalition they would have been delighted.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): They have got it now.

Mr. Colley

This perceptive analyst would find it ironic that Deputy FitzGerald should be leading. Bad as the Coalition's record was, it would have been incomparably worse if some of the harebrained economic ideas advocated by Deputy FitzGerald when he was Minister had been adopted by his colleagues. It is well known that during the Coalition's term of office Deputy FitzGerald made a few high-powered attempts to run the Department of Finance as well as his own Department. He is reputed to have put forward truly breathtaking ideas. In the hopeless circumstances into which Coalition mismanagement brought the country in 1976, Deputy FitzGerald, by all acounts, flabbergasted his Cabinet colleagues with a proposal to impose a 12 per cent levy on all agricultural produce——

Mr. L'Estrange

Nonsense.

Mr. Colley

——and at the same time to impose a wages standstill. Understandably, his colleagues were not enthusiastic about this and wiser counsels prevailed. In retrospect one must wonder how serious Deputy FitzGerald was about these proposals. Could he have felt that the Coalition were doomed anyhow and that the measures he proposed would bring their rule to a quick end and lead to a change of leadership in the Fine Gael Party? If his colleagues had accepted these proposals Deputy FitzGerald as Minister for Foreign Affairs would not have had to take the blame for them, but that would not have been unusual. Deputy FitzGerald was well known to us as an early advocate of wealth tax, but when the disastrous impact of that tax became apparent Deputy Richie Ryan was left alone to carry the can.

Mr. L'Estrange

Fianna Fáil did not promise to abolish wealth tax in their manifesto.

Mr. Colley

That proposal of Deputy FitzGerald's, a 12 per cent levy and a wage freeze, was so outlandish that it is just possible that it might have been a ploy by him to undermine Deputy Cosgrave. A trick that is not unknown in politics, is to beaver away from within with schemes to undermine your colleagues and your leader, being willing and even anxious to see your party defeated so that you can take over.

(Interruptions.)

An Leas-Cheann Comhairle

Deputy Kelly was not interrupted. There were no interruptions here until the last half hour. That is not the way to run this House.

Mr. L'Estrange

We are not interested in what happened——

An Leas-Cheann Comhairle

Deputy L'Estrange.

Mr. Smith

How many leaders have Fine Gael?

Mr. L'Estrange

How many have Fianna Fáil?

Mr. Colley

My time is running out. The bankruptcy of the Coalition was illustrated quite clearly yesterday on the radio when poor Deputy Enright went on the air to complain about the increases in electricity prices. When he was asked what ought to be done he was tongue-tied. I am not blaming him for this, but clearly he was not given any sort of brief when he was going on the air. I assure Deputies opposite that a question that is going to be put to them more and more is, "What would you do?" They are going to have to tell the public. The public want to know and are entitled to know.

An Leas-Cheann Comhairle

The Minister has one minute to conclude.

Mr. Colley

We got very little evidence from any statement made to date since the last election as to what they would do, but we have had some indications, including even by implication, from what Deputy Kelly was saying this evening. It would appear that if they were back they would put rates back on domestic dwellings and car tax on all cars. They would tax co-operatives and refuse the VAT refund to farmers. They would reimpose the wealth tax —although Fine Gael are very coy on that; they try to have it both ways. Sometime maybe they will tell us whether they would reimpose it.

Mr. L'Estrange

The Minister's party did not mention it in their election manifesto.

Mr. Colley

There is one definite thing we have. At the Fine Gael Ard-Fheis Deputy FitzGerald proposed, with a great flourish, index income tax rates. He then said, "Of course, you would have to index also indirect taxes". The consequence of that, which I am sure the House would like to know, is that what was being urged by Deputy FitzGerald was that you would reduce the income tax married allowance from £2,230 to £1,315, you would increase the duty on a pint by 5p, on a glass of spirits by 6p, on cigarettes by 4p and on petrol by 19p a gallon. There is a case to argue for indexation, for transferring from direct to indirect taxation, but those who advocate it should let the people know what they are advocating. Fine Gael are advocating those kind of increases.

Mr. L'Estrange

According to the Minister.

Mr. Enright

I would like to pay one compliment to the Minister and it is for his pure neck in coming in here and in regard to his approach to this situation. He appears to have a measure of confidence about him. I am surprised that he can, even at this stage, put up such a front as he has presented to the House tonight in regard to the approach of the Government, of which he is one of the senior members. I will be surprised if all his backbenchers who vote for different motions come in here and show their confidence in what has happened throughout the country during the past 18 months. The approach of the Government in regard to our economy has been one step forward and two steps backwards.

I would like to refer to what the Minister said in his budget speech last February when he brought in the 2 per cent agriculture levy. He dealt with the position with regard to services and the measures being taken to recover a proportion of the cost of the animal disease eradication programme. He said:

...the Government consider that the farming community is now in a position to pay for the cost of the education, research and advisory services specially provided for agriculture. These are estimated to cost about £30 million in the current year. The cost will be recovered by means of a levy of 2 per cent on the following agricultural products—cattle, milk, pigs, sheep, sugar beet and cereals.... These products will account for an estimated 90 per cent of total agricultural output this year.

Mr. Colley

Would the Deputy indicate where his quotation began because he said something I did not say and it appeared as if it was in the quotation?

Mr. Enright

I can quote the full text if the Minister wishes.

Mr. Colley

Would the Deputy please indicate where the quotation begins and ends?

Mr. Enright

The Minister was dealing with the final item in relation to the cost of services. He dealt with the measures taken to recover a particular portion of the cost. He then dealt with the cost of education, research and advisory services specially provided for agriculture. At that time different pressures were placed on the Minister by different people in regard to this levy. We were told then that there would be no change, that the 2 per cent levy was there, it was imposed in the budget speech, it was Government policy and it could not be changed. The Minister repeated this on a number of occasions in different interviews when different people approached him.

Some weeks afterwards at the Fianna Fáil Ard-Fheis the Minister made amendments to the levy. The matter was taken to court and an undertaking was given by counsel for the State in regard to moneys that may or may not have to be refunded. I am referring to this because this is a part of budgetary policy. I have not the actual quotation but I am certain the Minister will contradict me if I am wrong. The Minister said at that time that once matters of budgetary policy were promulgated and set out they could not be changed.

Mr. Colley

I did not say that.

Mr. Enright

The Minister stated that once the Government issue a statement in regard to the collection of taxes and so on it could not be changed.

Mr. Colley

It is changed every year, as the Deputy probably knows.

Mr. L'Estrange

Not between the budget and the Ard-Fheis.

Mr. Colley

The biggest change ever made was under the Coalition Government, the farmers' tax.

Mr. Enright

This was a very grave mistake by the Government. The levy is only one aspect of the matter. The Minister continued with income tax and increased the amount of income tax paid by farmers. Every year we have seen a minimum increase of 10 per cent in rates on agricultural land. The farmers are now being asked to pay a levy, income tax and rates. This is a serious situation. If the Minister asks any backbencher in his party he can be told that he has really scared the farmers and he can be told about the feeling among the agricultural community throughout the country. We also have the situation in regard to the disease eradication scheme. In addition there are the various other levies in respect of animals. The whole approach is causing concern.

Mr. L'Estrange

What about the decline in cattle prices?

Mr. Enright

Any farmer will be aware that there is a serious decline in cattle prices. Farmers who bought cattle in the early spring of this year are selling them now in some instances at the prices at which they were bought and in other instances they are selling at a loss.

Mr. L'Estrange

In addition, there is the 2 per cent levy.

An Leas-Cheann Comhairle

Only one Deputy may speak at a time.

Mr. Colley

Deputy L'Estrange must interrupt. I think it is a congenital difficulty so far as he is concerned.

An Leas-Cheann Comhairle

I do not think he can avoid interrupting.

Mr. Colley

He is making up for a long period of enforced silence.

Mr. L'Estrange

I have never been silenced.

Mr. Enright

I am surprised that the Chair, too, has not been helping me out. In addition to all these other difficulties, a farmer who borrows money from the ACC pays interest rates of up to 17½ per cent while long term borrowings attract interest rates of up to 19½ per cent. Is it any wonder, then, that the farmers are extremely concerned and anxious regarding their future?

I am sure that any of the Minister's backbenchers will confirm what I am saying. They must know the difficulties for those in the pig trade, for instance. Farmers involved in any aspect of pig production are incurring losses at every level of the operation. One of the main reasons for this situation is the rapidly escalating cost of feedstuffs. Any town that is lucky enough to have a meat factory is in a position to provide valuable employment. Usually the employees in such concerns are among the better paid groups of workers.

The Government must do something now about cattle and pig prices in order to maintain a profit level for the producers. Otherwise, farmers will be placed in a very difficult situation. There is evidence that cattle numbers are down. This, too, is a serious situation. Pig numbers may have increased marginally but there is no room for complacency because if the producers are to continue to incur losses, it is obvious that pig numbers will decrease, too. During the past five or six years some farmers have shown their confidence in agriculture by being prepared to borrow money for various improvements and for increasing stock and so on. Despite the high interest rates to which they have been subjected they have not been deterred from pushing ahead with improvement schemes but the stage has been reached when they are experiencing much difficulty in meeting those high interest rates. Farmers endeavouring to buy cattle that they are in a position to feed during the winter months are experiencing difficulty in regard to arranging loans with their banks. No doubt the losses being incurred generally by farmers have a bearing on this situation. We must blame the Government for these difficulties. They have mismanaged the economy. However, if they make a serious effort now to engender confidence once more in the agricultural sector there will be some prospect of a future for the industry. Other factors, some of which relate to other Departments, have played a part in the present difficult situation. For instance, in regard to the disease eradication schemes, farmers are experiencing difficulty in having blood tests and so on carried out on their animals.

Mr. Smith

Disease eradication was neglected totally while the Coalition were in office.

Mr. Enright

It will be interesting to know whether Deputy Smith will have the confidence to support the Minister during this debate next week.

Mr. Smith

Of course I will support him.

Mr. Enright

If so, will the Deputy have the courage to have his speech published either in the Tipperary Star or in the Nenagh Guardian?

Mr. Colley

Are Fine Gael against the payment by farmers of rates and taxes?

(Interruptions.)

An Leas-Cheann Comhairle

Order.

Debate adjourned.

The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 25 October 1979.