When moving the adjournment last evening I was saying that no previous budget was as well predicted or as correctly foretold as the present budget. This is because of the open nature of the Fianna Fáil Government and the public figures released regarding the good housekeeping of the Government in 1979, a year that was a most difficult one for all open economies.
Financial Resolutions, 1980.
Financial Resolution No. 19: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law in relation to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance).
Would Deputies please leave the House quietly?
The Department of Finance made public the pre-budget estimates prior to the budget. Fianna Fáil laid all their cards on the table and because there were no cover ups or misleading of the public, every thinking and caring person was aware of the nation's financial state and financial needs. Individuals were able to see what might be done to ensure our progress under the Fianna Fáil manifesto. A proof of this was the Wednesday morning papers of 27 February being able to forecast accurately enough a cut in PAYE, a rise in social welfare payments and the fact that there would be a rise in indirect taxation. All the predictions of the media, people outside the House and the Opposition, were far from being fully accurate. What the Minister for Finance did took the Opposition's breath away and gave more breadth to our economic confidence.
This budget cuts PAYE tax payable but by a much greater margin than the Fine Gael or Labour Parties anticipated or expected or even dreamt of doing themselves. In the words of the Taoiseach this budget is a land mark on the road to achieving equity in taxation. It is good to be reminded in 1980 that when Fianna Fáil were in Opposition in 1976 the need to cut into income tax and benefit married couples was published in our economic document and was later very much highlighted in the 1977 manifesto. In 1978 our Government committed themselves to the full implications of income splitting. What the Government did in the budget regarding taking another giant step in changing income taxation is but an affirmation of Fianna Fáil's traditional position and is proof positive that we mean business. The 1977 manifesto promises are being fully delivered and, irrespective of what the Opposition parties say, are being delivered on time.
As a result of the Minister's frank and fair budget concerning taxation many families are now considerably better off. There are large increases in the size of income tax bands and substantial increased tax allowances for PAYE taxpayers. Since the budget we have heard nothing from those who moralised about the eroding of respect for the married state. How often was it said in the past two years that our taxation system made it financially more profitable for people to live together rather than to be married. Where are those moralisers now? We have yet to hear any praise for what the budget does to quell the apparent scruples of those mercenary minded moralisers. We are fully aware of the improvements that have been introduced in the budget for married couples. Income splitting has been introduced for all married couples effectively giving them double the single persons' tax bands as well as double the personal allowance representing a major social advance in enhancing the place of the family unit in the community.
For people in the lower income group complete exemption from tax will apply to the single person under £1,700 per annum and to married couples with less than £3,400 per annum. Marginal relief will apply above these limits at a rate of 60 per cent. That aspect of the budget will ensure that 75,000 people who are now paying tax will be exempt in this tax year. That is just one aspect of the many good things and forward thinking introduced in the budget.
I see in this budget one which sets the country along the road towards self help. It must increase people's faith in themselves to help themselves. It cannot be described and is by no means a surface or handout budget. What it does to increase a family's income it does in such a way that the family earner and his dependants can see that it is he himself who increases the income. In its taxation programme, it is an incentive to increase production. It rewards increased production. It will build up a sense of worth and independence and make employees less dependent on the State. Increased production and less dependence on State aid among those in employment who are willing and able to work will help boost growth in the number of jobs becoming available and being created for the coming generation of young workers.
Since Fianna Fáil came into office in 1977 they have always shown themselves to be a caring Government. We have committed ourselves to looking after more and more and bettering the less well off and less privileged in our society. Nobody can deny that we have done most for the needy in our community. Social welfare beneficiaries in the past two years under Fianna Fáil have received average annual increases in the region of 10 per cent. We are all fully conscious of the need to increase this annually. Can anybody deny that the Minister's declaration of increases of between 20 per cent and 25 per cent in this budget is to be applauded? When we had the Coalition Government in office, particularly at budget time, it was always emphasised that they did most for the less well-off. I would challenge any member of the Opposition to deny that at no time in the history of the State were increases of this order ever given to social welfare beneficiaries, because never before was such a significant increase given to the under-privileged and less well-off in our society. There is no need for me to emphasise the real value of that increase to the poorer sections of the community irrespective of what the Opposition party may say in regard to inflation and so on. This significant increase constitutes a big step in the right direction.
The only way the Opposition can dare criticise this part of the budget is to make outlandish and gloomy predictions about a very high inflation rate which would negative those increases. But, despite the current inflation rate, I feel confident that when we come to introduce the budget next year the under-privileged and less well-off sections of the community will have had their best year in many, in fact the best in the history of this State irrespective of what inflation occurs in the meantime. Indeed I might add that solid, realistic and factual predictions of the inflation rate for 1980 show that it will not be anything like that totted up by the Leader of the Fine Gael Party.
When the State increases its benefits to those in need and to those people employed who need incentive—and this is being done on a large scale in this budget—it means also that the State needs more money. I read recently an article by a financial expert on the budget who advocated and praised many of the increases granted by the Government. But, when it came to the Government needing more money in order to provide these increases, the same writer baulked. His anguish was that in 1980 £1,080 million would be collected by way of income tax. Every honest citizen knows that if the State is expected to provide services, aid and a living for all its citizens it must collect the money somewhere. Some financial, political pundits expect the impossible, but the ordinary man in the street has no objection whatsoever to paying tax. Indeed the PAYE demonstrators were not against paying tax but were lobbying for the payment of equitable taxes. It is as simple as that. The reason those people were marching on the streets was that they were for the payment of an equitable amount of tax; they were not against paying income tax. Naturally they know they have to pay a certain amount to ensure that the country and the economy are kept moving.
I believe this budget achieves equity more than any other in the history of this State simply because it constitutes the development of Fianna Fáil fiscal and economic policies. Down the years we were all fully conscious that people in general, and politicians in particular, were of the opinion that changes were needed in the tax code. This Government is the first in the history of this State to tackle that matter in an efficient and proper way in this budget. Again, as in the past, it was left to the Fianna Fáil Party to put that into effect. Another factor that makes the payment of tax tolerable for people is when they realise that money is being spent where it is most needed, where it will best promote progress and prosperity.
Above all other trends of government policy which emerged in this budget the most important economic one is that of land and industry being encouraged to generate their own wealth, reinvesting it in order to ensure its preservation and promote growth. State aid and grants are to be available as primers only. Farming and industry must increase their production, recognising the need for a constant increase in production. They must get into world market places, creating and financing their selling force because production and selling are the key notes to success. The State, of itself, cannot increase production or sell products; it can only encourage them, and that encouragement is being given by this Government. The expertise involved in both farming and industry should ensure that no effort is spared in that direction. I feel confident that we have the expertise in both those fields to ensure that the appropriate market places are explored and that the essential improvements will be achieved. It is essential that farming and industry should work hand in hand. The budget brings about a situation whereby the tug-of-war that seems to exist between the PAYE sector and the farming community can be resolved. The farming community are fully conscious that they have to pay an equitable share of taxation and the budget ensures that the section of that community who are taxable will pay their share on the basis that if they do not earn money they will not be liable. It is as simple as that. The farming community are conscious of that and see the accounts system as the fairest system. The notional system has been abolished, a move I agree with. That system, particularly last year, proved to be very unfair. It would always be unfair when farmers had a bad year. Farmers assessed under the notional system last year paid a lot more money in taxes than if they were assessed under the new accounts system. For that reason I welcome the decision to abolish the notional system and I am confident that the farming community agree with it. I believe they will accept that the accounts system is the best system. Farming is big business in this modern age.
The budget seems to be saying gently to an over-dependent workforce, industry and agriculture, something with which we must agree and act upon in the eighties, that the State does not owe us anything. We have to learn the sane economic fact of life that if one contributes in one's capacity as a worker and a taxpayer then one is a genuine partner with one's country. The budget generates that theme. The Minister for Finance was referring to that when he dealt with pay policy on budget day. He told us that success or failure in dealing effectively with pay policy problems would depend critically upon incomes, the climate of industrial relations and a shared community concern. I endorse his convictions that the overall impact of the budget will be seen as making a positive contribution towards restrained responsible pay agreements.
Nobody will be asked to take less than equitable pay but we must all accept what is enough, having regard to the economic climate of the day, financial circumstances and the prosperity hopes of a sharing and caring community. The budget generates amongst workers a frame of mind which helps them share the anxiety of the Minister for Finance in this direction. The best results for the nation contained in the budget are the indications of progressive and developing policy. There is a soundness about its aims which should gladden any sensible business person. We are not simply going to pay for services; that is counterproductive. The growth of public pay and pensions reached a staggering £1,158 million in 1979, an increase of 25 per cent on the 1978 figure. On the other hand the public programme at £1,154 million is 15 per cent above the 1979 out-turn and 42 per cent of this programme in 1980 will be devoted to improving the productive capacity of the economy, including an increase of 22 per cent in the provision for industrial promotions by the IDA and so on.
That represents very positive spending and, in a difficult year, is allowing sufficient funds for continued expansion of job creation to which Fianna Fáil and indeed the nation must be committed. The budget also emphasises the need for industrial peace because it is only in such a climate that increased job creation can occur. I feel confident that the Taoiseach's speech to the nation shortly after he was elected to the office, was taken into account by all our people. He got the message across in a proper and efficient manner. He stressed that it was essential this year that we have industrial peace and that every effort be made to ensure that it prevailed. I am confident that heed has been taken of that sincere request. The budget demands that we face up to harsh economic realities which are largely due to outside unavoidable economic circumstances. We are all conscious of the fact that the world oil crisis has been a severe blow to many countries, particularly to young industrial countries like ours. I am not playing politics when I say that the deficit which the Government had to tackle this year was largely due to the world oil crisis. The Government must also face up to the harsh economic realities. The increase in taxation on petrol will lead to restraint in consumption and this in turn will aid energy conservation, a benefit that will outweigh whatever may be added to the inflation rate by the increase concerned.
The other big increases in taxation are on non-essential items such as cigarettes, beer and spirits. There is no obligation on anyone to purchase such commodities. As one who has been involved for a long number of years in the licensed trade I am fully conscious of the development during the past number of years whereby young people would seem to be drinking far more than they should be drinking. Naturally, this is a matter of much concern not only to parents but to all responsible persons. Perhaps the increases in drink prices will go some way towards reducing the consumption of alcohol among our young people. All reasonable people must agree that if a government must raise extra revenue they are justified in increasing taxation on what are known as the old reliables.
This is an intelligent budget for an intelligent people. It is an informed budget for an informed public. Also, it is an equitable budget and a budget that should encourage moderation among a people who are in need of moderation. More than anything else, however, it is a budget for expansion in the eighties. To this extent, we have a start on the rest of Europe. I am satisfied that anybody who studies the various proposals will realise that the Government are going a long way towards rectifying the economic situation, a situation that would have arisen regardless of which party were in power, as a result of the world oil crisis. I am confident that the people are rowing in behind the Government in their efforts to rectify the situation and I am confident also that the Taoiseach has the full support of the people in regard to the various proposals.
I am pleased to have the opportunity of contributing to this debate and of making reference to the state of the economy. The last speaker seems convinced that the budget has the approval of the people generally but I suggest that the Government put this to the test and let us find out how the people will respond.
In common with the Fianna Fáil manifesto, the budget has created far more problems than it seeks to resolve, There is nothing in the budget that would seem to help to resolve the economic disaster in which we find ourselves. All we have is a cosmetic exercise aimed at covering up an ugly economic situation. No one can deny that we are in the throes of a serious economic depression which is affecting the lives of our people and which is causing misery to many individuals and groups.
Instead of stabilising prices and restraining inflation, this budget will only fuel the flames of inflation and will lead to chaos in regard to prices. Regardless of what has been said by the various Ministers there is no great evidence of price control but there are continuous rounds of price increases. We had them before the budget and immediately afterwards. Housewives are bewildered in trying to meet the cost of the weekly food bill. Each week they find that they need more money to buy the same amount of goods as they bought in the previous week. There is certainly not evidence of price control in the supermarkets.
There is evidence of officers of the Department visiting smaller shopkeepers in towns and villages but little evidence of price control in supermarkets whose prices are changed from day to day and sometimes even a number of times each day, always upwards. Working-class housewives and social welfare beneficiaries are in this way being exploited as never before, and the wage increases and concessions in the budget in respect of PAYE and social welfare benefits will be frittered away as a result of rising prices and consequent inflation.
We all know that Fianna Fáil Governments have been highly professional in presenting package deals of the type contained in this budget which have been done with great care and sophistication, designed to please and to placate, but when the goodies are analysed I am convinced that this package will blow up in the faces of the various categories whom it is supposed to be designed to benefit, in the same way as the manifesto promises blew up after a short time.
As time passes, the supposed concessions given in this budget will prove to be sleight of hand of the type we have come to expect from Fianna Fáil Governments, who give with one hand and take away with the other. Experts who have been analysing the alleged concessions to PAYE workers more and more have been coming to the conclusion that these benefits are illusory. The 20 per cent to 25 per cent increases given in social welfare benefits in my opinion are also illusory. Fianna Fáil have been gloating about the large increases given to social welfare beneficiaries, failing to realise that they are being outstripped by price increases and inflation. Unless something is done to arrest these trends the working class generally will be worse off this year than ever before.
For that reason I appeal to the Minister for Health and Social Welfare, the Taoiseach and other members of the Government to recognise these facts. They have been unable to stop inflation, and in order to maintain the low living standards of those on social welfare benefits, the widows, the aged, the sick and the unemployed, there is a bounden duty on them to increase these benefits again in October. The Coalition Government, in times when prices were not rising nearly so fast and therefore inflation was not nearly so rapid, provided for two increases annually, one in the budget and another in the autumn. The previous Minister, Deputy Cluskey, showed his concern for those people by providing proper increases at regular intervals after carefully analysing cost of living and inflation trends.
This Government have a similar obligation: because so little is being done to control prices they must give further compensation to the underprivileged in the autumn. I ask the Minister for Finance to place on record when he is replying to this debate whether it is the intention of the Government to continue the practice of the previous Government to provide October increases for social welfare beneficiaries.
I said earlier that doubts are being cast on the effectiveness of the changes in the taxation system. Those of us who have looked at the situation are satisfied that changes in taxation bands and rates will give the biggest concession to those with the biggest incomes. A married man with three children, and a wife not working outside the home, on £80 per week will get back the princely sum of only £1.60 a week. A man in a similar situation on £120 a week will benefit to the extent of nearly £4 a week. A man on £200 a week will benefit by £12 a week, and if a man is earning double that amount, £400 a week, the budget will give him back nearly £42 a week or £2,178 a year, more than many workers are receiving in wages.
To my mind the increase in children's allowances is an illusion. Anyway, any increase given will be whittled away because this year the increase has been matched by a reduction in the income tax allowance. The net gain for a family on the 35 per cent tax rate is only £4 a year for the first child and £10 a year for each child thereafter. There has been a net fall, therefore, of State support for the children of lower paid parents, who have been losing out steadily under Fianna Fáil budgets by comparison with others in the community.
Taxation experts who, I imagine, have not a political axe to grind, have gone on record in our daily newspapers in an effort to alert people to their true position in regard to the tax concessions in this budget. The following comment appeared in The Irish Times on 11 March concerning taxation and the budget:
Taxpayers' feelings of euphoria engendered by the recent budget are misplaced. The Government have got away with it again. Through a mixture of shrewd political planning and judicious public relations Ministers have managed to diffuse the tax bomb for a little longer.
I wish to quote from another article:
Married couples are expected to gain most from the change in the personal tax provisions of the 1980 budget. However, the potential gains are not as significant as most people appear to believe. Even with sustained pay increases, many married couples could still find their living standards lower in 1980 than in 1979 due to the combined effects of inflation and the personal tax code.
These are not my words; they are the views of the experts. Here again we have this giving with one hand and taking away with the other.
It cannot be denied that it is more difficult now to exist in this country than ever before, the main reason being the high cost of living. Shopping today is a very sobering and bewildering experience for housewives. With the crazy spiralling of prices damage has been done to our tourist industry. We are simply pricing ourselves out of the tourist trade.
There was a time when the budget was regarded as the economic barometer, the occasion when we had to contend with price rises and taxation and it was possible to deduce the economic trend for the rest of the financial year. We have had a number of budgets prior to the present one. There was a budget after it and we are threatened with an autumn budget. Apart from the increases imposed before, in and after the budget there are more mini-budgets to come. There is the increase in the social welfare contribution and it is forecast we may expect an increase of 20 per cent in postal charges, TV licences, telephones and so on. We are no longer confined to a major budget to resolve our problems and as an illustration of that I should like to place on record the trend of events for this year.
Less than three months of 1980 have passed. At the start of the year we had various price increases: there was an increase in the price of cigarettes in January, an increase in the price of coal of £3 per ton and an increase in the price of gas of 16 per cent—the fourth increase in eight months. There was also an increase in the price of flour. In the middle of January there was a major announcement by the Minister for the Environment that is bound to have the most serious repercussions on standards, amenities and employment. I am referring to the restraint placed on local authorities confining them to an increase in rates of not more than 10 per cent of last year's figure. Every county manager knows that is totally inadequate to provide for further development and to maintain standards. It will not allow local authorities to maintain essential services. Employment is seriously threatened and yet there is talk about this budget being good for the economy and for the creation of more jobs.
Worse was to come. Before January was over the same Minister gave news that shocked and appalled those of us concerned about local authority affairs especially in the important area of housing. The Minister, Deputy Barrett, announced the abolition of grants for repair and reconstruction, the abolition of the energy-saving grants as they are more popularly known. There was an increase in the loan for new house building from £9,000 to £12,000 but that was inevitable having regard to inflation.
I know we have had a debate on this matter during the past two days. It will have serious repercussions in the building industry apart from denying people the facility they had to improve their homes. The Minister's announcement dealt a deadly blow to co-operative building enterprises. I am aware of the intrinsic work of co-operative building in my constituency. The people involved have done very good work. They have built housing schemes of the finest type in Clonmel, Carrick, Fethard, Waterford and many other places.
When the Minister raised the loan to £12,000, he stipulated that the facility which county managers and county councils provided whereby people were given a separate loan to purchase the site be withdrawn. My council, South Tipperary, were able to assist co-operative building groups by giving them a loan of £3,000 or £4,000 for the purchase of a site on a long-term basis over 30 or 35 years and gave the £9,000 loan on top of that. Long before the present Minister made the £12,000 available these people were getting £12,000—and more. We now understand that local authorities may provide £12,000 only. This has meant the abolition of the facility whereby people were given separate loans to purchase sites. It has meant the end of co-operative building of the kind I know. I earnestly appeal to the Government to realise the damage they have done in that area and undo it as quickly as possible.
That was in January last. Talk about budgets, about economic indicators—a few days afterwards, on 28 January, CIE fares were increased by 20 per cent. This was all to take the sting out of the budget proper. Bread, the staff of life of the poor, was taxed the same day, and milk was increased in price. The standard loaf went up 5p and milk was increased to 13p. There is a budget for you. In February we had another budget: ESB accounts were increased by 20 per cent, 60p per week on a £25 two months' bill. This followed 10 per cent in October and 20 per cent last June.
Coal went up again in price. We anticipated an increase in liquor and beer prices in the budget but they did not wait for the budget. On 4 February the pint went up 2p, spirits went up 3p. On 18 February petrol was attacked again. We knew that perhaps petrol would jump in the budget but there again they jumped the gun: they wanted to soften the blow. Petrol went up 7p to 10p per gallon and home heating oil 6½p to 9p a gallon. On February 20 we had the revelation of the estimates for the various departments of State and, to our consternation, many of these estimates showed massive cut-backs which are bound to have very serious repercussions as time passes. Nearly all Departments are involved but the most serious cuts are in housing, education, health and agriculture and public spending generally is hit. This public capital programme cuts all forms of social spending. That comprises a little of what transpired in January and February this year without going back to 1979 or further.
Then we come to the budget proper. In that much-lauded budget, which so much had been done to defuse, petrol, diesel and liquid petroleum gas went up 20p a gallon; the excise duty on cars went up from 35 per cent to 40 per cent; cigarettes up 10p for 20 and pro rata increases for cigars and tobacco; the glass of spirits went up another 16p; we had 6p more on the pint; 40p on the bottle of table wine and 10p on the gallon of cider; 30p on table waters. VAT was increased from 20 to 25 per cent; the charge for motor car registration went up from £5 to £10 and in the case of motor cycles from £1 to £5.
I suppose it is accepted generally that one of the items responsible for giving Fianna Fáil the greatest majority of all time was the abolition of tax on cars. Here we see an abandonment of the solemn promise made in the manifesto, one of the gimmicks which gave this party such a massive majority here. Driving licences went up from £2 to £3. The notional method of farm tax was abolished but there are many strings attached which I shall take up later. The threshold of liability to tax was lowered from £50 to £40. Capital allowances are to be confined to plant and machinery only and a resource tax is to be applied to farmers with holdings of £70 valuation—£3.50 per acre. Income tax child allowances were reduced from £218 to £195. These are some of the measures in the budget. It did not end there.
One might feel entitled to assume that would be the limit of the bludgeoning of our people but within a very short time of those massive increases throughout January and February we had further increases. The cylinder of gas which is essential in most poor homes here, especially amongst the underprivileged, went up by nearly 80p a cylinder, and petrol was driven up still further by 2p a gallon. Cigarettes increased still further. What kind of crazy behaviour is this? Where is the budget? Where is the fairness? Where is the honesty of administration in practices of this kind? Where is there any evidence of cohesion and understanding between Ministers when this can happen? I feel pretty certain that it is not the end of the story. There is more to come; there is more in store for us.
I remember very vividly, and the nation will remember as well the previous Minister for Industry and Commerce, my colleague, Senator Justin Keating, being vilified in this House on prices, pilloried in the press on prices, continually lampooned on television on prices. Many fine men lost their seats in this House by a campaign of character assassination carried out on them on this issue of prices. Now, prices are soaring as never before, unbridled. Before this year is out, we shall have exceeded 20 per cent inflation. No one now denies that fact.
The man who vilified most of all the then Minister, Senator Justin Keating, is now presiding over this debacle—Deputy Desmond O'Malley, Minister for Industry and Commerce. He is presiding over this ruinous situation which he promised he would resolve. Mind you, there is little whimpering in the country. We were all savagely attacked at that time. The present complacency amongst all shades of public opinion in the press and the media is difficult to understand. You did not see much about prices, or the budget on Frank Hall's show last night, no. He dealt with less controversial, more innocuous subjects.
You cannot blame the price of oil or the Arabs for this sorry trend of events. No one compelled this Government to abolish the food subsidies. No one compelled them to remove the food subsidies and, at the same time, remove the wealth tax from our millionaire classes. The decision to remove the food subsidies was a cold-blooded, calculated, deliberate act, which they knew would increase the cost of living for the most underprivileged of our people. The removal of the wealth tax is difficult to understand but it did demonstrate to all of us a most shocking example of social injustice, of pandering to the rich and exploitation of the poor. It was an act which will not easily be forgotten or forgiven, which marks this party which governs our country at present as a party incapable of, bereft of, social justice. It is clearly a party which fostered greed in its manifesto, pandered to materialism. The gimmicks were good, the promises were lavish and the Government are now reaping the whirlwind of economic ruin and virtual bankruptcy to which they have subjected our country. Now that things have gone haywire and backfired they cannot complain. They have sowed the seeds of their destruction in that manifesto and, unfortunately, all of us are reaping the whirlwind. Neither can this Government be listened to with interest or hope for a response when they call for responsibility and restraint from certain sections of our people, especially in a situation where our working classes can see their standards being lowered all the time by unbridled price increases.
I feel that the workers of this country and the unions which represent them will not be intimidated by threats of antiunion legislation, threats of penal legislation, designed to curb the activities of the unions. We are well aware that union bashing has been a feature of this administration in recent times, as was particularly evident at their Ard Fheis. We have seen before, in this House, attempts being made to curb the legitimate activities of our unions. I am certain there are people around this House who, if they got half a chance, would try to destroy the concept of trade unionism. I am sure, too, that they have learned the lesson, as Mrs. Margaret Thatcher has, as Edward Health before her, that you cannot legislate to force men to work if they do not want to work.
The direction of labour is only possible in a dictatorship. In essence, unless inflation is halted, unless prices are controlled, wage increases will be worthless; living standards will fall; social welfare beneficiaries will suffer. I have proved, by my remarks, that the so-called goodies of this budget are of a very transitory nature and will fade away quickly to nothing.
I talked earlier about the cut-backs in Estimates. I expressed concern about employment, by reason of what was being done in the local authority area. I am further concerned that there is an abandonment of the alleged policy of providing more jobs in this budget. I am concerned that the Minister for Finance made no reference to the employment maintenance scheme in his speech and concerned also about the abolition of the Department of Economic Planning, which had a useful purpose in providing more jobs. I listened to the speech of the Minister for Labour, Deputy Gene Fitzgerald. It is clear from that speech that, far from providing more jobs, the employment maintenance scheme, which was of such great value, is about to be abolished. This is the scheme which was designed to aid those industries which were in economic difficulty—the textile, clothing, canning and footwear industries. About 370 firms involving 30,000 workers have benefited under the scheme, we are told by the Minister, with total cumulative payments of over £12 million up to the end of 1979 of which £7 million was paid in that year. Some 30,000 workers benefited by the scheme. The withdrawal of the employer maintenance schemes can have most serious consequences. It would have been a far better thing if the scheme were never introduced than that it should be withdrawn in this fashion. The Minister implied that it was because of an EEC regulation that he was obliged to withdraw it. That does not stand up to examination.
We observe that when the French, Italians or British want to have their way in respect of preserving the interests of their communities or sections of it or their industries they proceed to do certain things in defence of their people. There is nothing to stop the Minister from continuing with this scheme. Its abandonment will place many of these factories in peril and place the jobs of the workers in jeopardy. These are vulnerable industries which successive Governments have had to protect, nurture and develop as best they could. They have now entered a free trading situation but are still subjected to unfair trading from low cost countries. We have a right to protect them. There is a regulation in the Rome agreement which ordains that in the case of any industry which is seriously threatened the Government of that country have a right and duty to protect it. I earnestly appeal to the Government to reconsider the continuation of the employment maintenance scheme.
I hope there will be an acceleration of the youth employment schemes. I do not thank this Government all that much for the work done in this area especially when it is realised that for every £100 spent on youth employment schemes we now derive £55 from the European social fund. In that kind of happy situation any Minister should be pleased to accelerate the activity in this area and put more and more of our young people to work. Previous Governments did not have that tremendous financial aid but they carried on as best they could.
It is in the area of the industries to which I have referred, clothing, footwear and tanning, that the greatest damage can be done by the withdrawal of the scheme to which I referred. I wonder if advance notice has been given to the industries concerned. What consultation, if any, has taken place with the unions concerned? Does the Minister realise the damage that can be done by the withdrawal of an incentive of this kind whereby £5 is paid for every worker in these industries? I do not accept that Brussels said there was no way out. We are a small country and to my knowledge every successive Minister in the EEC concerned with this area was made aware of the vulnerability of the textile, clothing and tanning industries here. We are all aware of the damage which free trade has done in that area and of the loss of jobs over the years when the swaddling clothes of protection were removed and these industries were exposed to the icy blasts of free trade. There are now aids within the EEC and methods to be used. The British have been using this system for a considerable time. They have been aiding their industries by subsidies of this kind. If they can do it why can we not?
I spoke about the Estimates for various Departments. There was a worrying statement from the Minister for Health in respect of hospital charges when the Minister clearly intimated that there were too many admissions to our hospitals and that they should be curtailed or controlled more effectively. In my area it was not necessary to make such a declaration because it is extremely difficult at times to gain admission to hospital. Our hospitals are usually full up and there is a continuous bed shortage. One is only admitted if one really needs to be admitted. One is not retained in hospital longer than is necessary for recovery. This kind of statement from the Minister for Health has serious implications. If we are to economise it is far better to do so with the material things of life than toying with the lives of people and patients in hospital. There is a great danger that this admonition by the Minister will be taken too seriously in certain areas and that when people have gained admission to hospital, they will be thrown out prematurely with great pain, hardship and, let us face it, death resulting from such a declaration.
I would remind the Deputy that he has five minutes to conclude.
I would hope that the Minister for Health would retract that statement and if, because of the implications involved, he does not, then I would hope that the Taoiseach, who held that portfolio until quite recently, would countermand that kind of order.
I took notice in particular of the speech of the Minister for Fisheries and Forestry, an area in respect of which I have a particular responsibility in the House. I want to avail of this opportunity to appeal to him and the Government to have special regard to a development which I regard as most reprehensible, that is, the dumping of fish around our coast. I have questions down to the Minister asking if his attention has been drawn to the growing tendency to dump fish rather than making it available for human consumption and if he will make a statement on the matter. I have further questions asking the Minister if he will ensure that our fishermen are adequately compensated for their labours and that catches of fish are made available to the public at prices they can afford, in particular to the poorer sections of the community for whom fish has become a luxury.
It is scandalous that this should occur in a Christian country. We have seen the naked face of capitalism throughout the world with the burning of mountains of potatoes and wheat, with petrol being poured over them. We have seen the mountains of butter in Europe but at least it was disposed of for human consumption. That this dumping of fish should happen in Ireland is utterly disgraceful and reprehensible at a time when so many of our poor would dearly love a meal of fish. Fish is scarce, dear and, in our inland towns, precious. Surely it is possible for the Minister, An Bord Iascaigh Mhara and the various agencies to find a method of distributing this precious food to our people, not to mention the hungry millions abroad, rather than dumping it back into the sea, spitting in the face of a bountiful nature. Having risked their lives to secure it, the fishermen spray dye on it and dump it. This is done rather than that a human being would gain a morsel of it. I never thought I would see the day when that would happen in this country. I ask this Government to stop this nefarious practice immediately. By all means let us compensate our fishermen and maintain them in decent standards. Nobody has spoken more fiercely here than I in respect of securing good standards for these men, not merely in their everyday lives but in sickness, infirmity and old age. But let that horrible practice cease. Let us find a way of distributing this precious commodity to the people who need it. Why can it not be refrigerated? Why can it not be distributed? If necessary, why can it not be sent abroad if there is a surplus here?
On that solemn note, deploring such a situation in a poor country with so many poor people, I appeal earnestly to this Government to stop that practice: it offends, it revolts, it cries out to heaven for justice.
I shall be brief in my comments on this budget. Firstly, I welcome the concessions given and improvements effected in the position of the older sections of our communty, the improvements in old age pensions generally and especially the improvement in their tax position. It was a major irritant for our senior citizens to be in receipt of an old age pension, and perhaps a contributory pension, from their place of employment, barely making ends meet, but at the same time being asked to pay tax on a portion of their income. It is that aspect of the budget I welcome most, from the points of view of the improvement effected in the pension position and also the increased allocations to those over 65 years of age who can now have an income of £4,000 per annum without paying income tax and those over 80 years of age who can have an income of £5,000 per annum free.
The general taxation measures will improve the position of the PAYE earner. Not alone will it improve the position of those within the country, but it will also improve our position relative to that of Northern Ireland and our neighbours in the EEC. Firms here found it difficult to recruit the most highly qualified people for our high technology industries when our tax situation was not nearly as good as in the case of many of our partners in the EEC. Therefore that aspect of the budget constitutes a major advance in equity, a major improvement of the position within the country, in that we will now be able to attract the best brains and indeed bring home some of our sons and daughters who pursued academic careers in universities around the world but who may be anxious to return home and contribute to our economy. Formerly such people, because of our very low tax bands, our almost penal taxation at a relatively low income level, found the rates of remuneration unattractive.
The other major sector of the community who pay tax are the farmers. In the last two years most people have become aware of the problems not alone for the farming community but for the non-farming sector, when on the one hand the farming community felt they were paying their fair share of tax while the non-farming community felt that the farmers were in a privileged position. There was almost a confrontation between the urban dweller, the PAYE taxpayer and the farming community, but the new taxation measures in the budget will certainly reduce that tension. At the same time they will not prove a penal form of tax on the farming community. The threshold has been reduced from a valuation of £50 to £40. In the long term I would not like to see any system of taxation based on PLV because of the inconsistencies of that system but I accept that in the short term we cannot do everything at once. It must be remembered that marginal reliefs will apply and that we now have a simplified system of accounts which will make it easier for those who are brought into the tax net for the first time.
It was important to make those concessions because the agricultural industry is of great benefit to the country. The PAYE sector should appreciate that 44 per cent of our workforce are dependent, directly or indirectly, on farming or agricultural produce. Since our entry into the EEC we have had a better opportunity to sell our agricultural produce abroad and the farming community have had for the first time an opportunity to develop. Up to now they were not in the position to pay tax. There is a lot of misunderstanding with regard to that. I welcome the decision to give liberal concessions to encourage those involved in the thriving agricultural industry. It is important that the non-farming sector appreciate the position of those people; they depend on each other. It is important to appreciate that farmers who earn a lot of money will be paying their fair share of tax under the accounts system.
I suggest to the Minister for Social Welfare that he make an effort to improve the situation in relation to recipients of prescribed relative allowances, those who must take care of incapacitated relatives. The allowance is of tremendous benefit to those people and has meant that fewer incapacitated people take up hospital beds. However, the allowance is restrictive in that if one has three people living in a house the allowance is not paid. An improvement in that situation would prove of great help to many people in rural Ireland.
The Minister for Finance should reconsider the amount of interest allowed tax free on savings. Up to a few years ago many young people managed to save money to pay a deposit on a new house and they were encouraged to do so, but there is little encouragement now because one is allowed only £70 interest tax free on deposits. I am not an economist but I cannot see any justification for such a low allowance. It should be remembered that those who put money on deposit have already paid tax on their earnings. If they have up to £800 on deposit they are taxed again on the interest they earn on that amount. People should be allowed to invest at least ten times the figure which would earn £70 interest per year because of the amount of time that has elapsed since that limit was set. A change would encourage more people to save in order to raise a deposit for a new house or house improvements.
I welcome the decision to increase the amount of loans for new houses from £9,000 to £12,000 and the raising of the income limit to £5,500. I was also pleased to learn that the loan for house improvements has been increased to £4,000. Another aspect of the budget which I welcome is the trimming of public finances and the reduction of our dependence on borrowing.
I also welcome the emphasis on productive areas and on our export opportunities. The decision to increase the allocation to the IDA by 22 per cent at a time of general cut-backs is also welcomed because we must keep encouraging industrialists to commence operations here. The IDA have been doing a good job in this regard and money allocated to them is well spent. However, they should put greater emphasis on regionalisation to encourage the siting of industries in rural areas where the population is falling and unemployment increasing. That would take some of the pressure off cities in regard to traffic and housing. In many cases there are fine facilities in rural areas such as harbours. In Cork the major effort by the IDA is in the area of Cork city where they have acquired up to 2,000 acres but there are fine facilities in other areas of the county. I am referring in particular to west Cork. Bantry can boast one of the finest harbours in Europe but the IDA do not own one acre of land in that area. I hope the IDA with the increased allocation, will buy some land in that area. I emphasise Bantry because the recent census revealed that two areas of County Cork showed a reduction in population, the Beara and Schull peninsulas. Bantry is located between those peninsulas. That town is losing its population because there are no job opportunities. That is to be deplored when one considers the tremendous harbour facilities that exist there.
There is a 28 per cent increase in the allocation for telecommunications. Every Member of the House must be aware of the difficulty experienced by individuals in having telephones installed, but in some cases too there is difficulty in this regard for industrialists and these people need telephone and telex systems for their businesses. Because of the situation that prevailed in the telecommunications area we were in danger of cutting ourselves off from the rest of the industrial and commercial world but the provision within a relatively short time of the best telecommunications system possible is one of the best investments we can make. In addition, it is an essential investment in terms of the efforts made by the IDA to attract industrialists to this country.
There is a 44 per cent increase in the allocation to the ESB. Rural Deputies will be aware of the problems of the farming community who are trying to improve their standard of farming by acquiring new electrical devices and so on but who are not able to get an adequate power supply.
There is a very big increase for Córas Tráchtála. This too is to be welcomed having regard to the work done by this body in marketing our products. There would not be much point in our increasing production in this relatively small country if we were not in a position to export the goods we produce. Córas Tráchtála have the task of trying to find the best markets for our products. It is important that they be given the necessary finance to enable them to do the best job possible and they have been doing a very good job.
However, there have been difficulties in some areas. Deputy Treacy referred, for instance, to the fishing industry. It is difficult to understand the reason for any food product being destroyed. There are difficulties too in the dairy industry in terms of butter mountains and skim milk powder mountains. There would not appear to be any solution on the horizon to these problems. The European Commission, and in particular their product management committees, should at this stage of the evolution of the whole Common Market be in a better position to undertake some forward planning in respect of these food markets. When so many people are starving in different parts of the world it is tragic that first-class food products are either being dumped or left for a long time in cold storage. This means that they are not being used to the best advantage of the producers.
There are problems too in the pig industry. Indeed, the situation in this industry is so bad that unless a unified approach is adopted by all the parties concerned irreparable damage will be caused to the industry, an industry that is worth £200 million to the economy. The price of Irish bacon on the British market is £300 per tonne less than is the price of Danish bacon on the same market. The Pigs and Bacon Commission are only marketing about 40 per cent of our bacon products. The situation is that the commission and the individual bacon factories are in competition with each other, under-cutting each other and contributing generally to the fragmentation of the industry. There is not enough emphasis on such matters as inspection of factories, better production techniques, a higher standard of hygiene and greater consistency in the quality of our pig products.
Another matter which the Minister might give some attention to is the increase from 10p to 30p in the tax on table waters. Many families buy packs of soft drinks and for them an incresase of the magnitude concerned will be quite an imposition. The soft drinks industry employs between 7,000 and 8,000 people. Another factor in this increase is that, at a time when young people are being encouraged to be responsible in regard to the consumption of alcohol, they will find that soft drinks also will be very costly. There is a need also to protect the industry.
The last point I wish to make is one for the Minister for Health and Social Welfare and relates to the contributory old age pension. There is a small number of people who do not qualify for this pension because stamps to their credit prior to 1953 are not taken into account in determining eligibility. These would be people who started work in the late thirties and in the forties and who made their contributions regularly up to 1953 but because these stamps are not taken into account some of these people cannot fulfil the requirement of the mandatory number of payments for a contributory old age pension. Perhaps in a future budget the Minister would eliminate this anomaly.
The budget is very fair in terms of the redistribution of wealth. It is particularly fair to old people. It has taken 8,000 of our old people out of the tax net and about 75,000 people who earn less than £1,700 out of PAYE liability. The budget has been fair to farmers and will be of benefit to the entire economy because the money being provided will be spent on expanding production.
The budget has caused an air of gloom rather than optimism because it will not lead to economic growth. I will refer mainly to two areas of concern, agriculture and tourism. An atmosphere of great doubt pervades the agricultural sector, particularly dairying, and this is particularly noticeable throughout Munster where the co-operative giants in dairy processing are operating. This air of gloom has been caused by the Government's attempt to unload an inequitable share of taxation on those engaged intensively in dairying. The comparative liability on small farmers with valuations below £40 is small.
When will we get away from the outmoded system of assessing tax on valuations? The system of determining PLV should not be applied in modern times. For instance, in Northern counties such as Monaghan valuations were determined according to suitability of land for growing flax. In Munster the suitability of land for wheat growing was the standard, and land near the coastline was assessed on its usefulness for the production of sand, gravel and seaweed for fertilisers. Such a system should not apply these days.
As I said, this budget particularly victimises the dairy farmer who is discouraged from expanding his production. I wonder does the Minister for Finance appreciate the value of dairy production and does he realise the input of machinery and fertilisers necessary, different types of machinery for different seasons. I can tell him that his new impositions on such farmers, particularly the resource tax, have had a strong reaction among farming organisations and this is obvious from the statements made by the IFA and the ICMSA who have been unusually strong in condemning the budget.
Last year there was a drop in agricultural output and the prospects for 1980, particularly in the cattle trade, are very gloomy. Now this new resource tax is casting a shadow over the entire industry. I wonder if this new form of taxation on farmers has anything to do with the preponderance of Ministers from outside rural areas?
The Taoiseach has said that this resource tax on farmers is a temporary expedient. I am afraid it is a substitution for another tax, the 2 per cent levy last year on farm production which was dropped on 1 January this year. In fact, in 1979 many farmers were paying this levy on losses. This year all farmers with valuations of more than £40 will not have rates abatement and this disadvantage must be added to the new resource tax.
In fact, the farmer with a valuation of £40-£42 and who is not liable for income tax could be in an even worse position than a man who has to pay tax because he can offset his rates bill against his income tax. The man with a valuation of £40 is paying double the rates he paid previously. It is very difficult to understand the reasons for this vicious tax on people who have an uncertain income and who have held onto their holdings during the years despite that limited income. These people did not build up their businesses on the basis of a 40-hour week—many of them worked an 80-hour week. At some stage there will be recognition of the long hours worked by people in the farming industry and I hope that will come sooner rather than later. Those engaged in the fertiliser and the tractor industries have said that their sales are not as buoyant as previously. The present tax system for farmers is short-sighted, immature and ill-advised.
People engaged in the tourist industry—particularly in areas remote from major centres of population—have grave reservations about the budget. An accumulation of factors has made the future most uncertain for the owners of guesthouses, hotels and those engaged in farm holidays. Tourists from Britain or from the North of Ireland are immediately confronted with our high cost of petrol—a gallon of petrol costs 32p more here than in the North of Ireland. This makes the prospect of a 200-mile journey to a seaside resort most unattractive to the tourist. I ask the Minister for Finance to consider issuing some type of voucher to tourists in order to reduce costs for them. There is little point in Bord Fáilte and the tourism bodies doing a relatively good job in promotional work if tourists find that the cost of living and the cost of travel is higher here than obtains elsewhere.
Another factor that will discourage tourists is the extraordinary tax put on drink. There has been an increase of 16p on a glass of spirits, 6p on a pint of beer, 10p on a packet of cigarettes and an increase of 30p per gallon on mineral water. The owner of a diesel car will have to pay an extra 20p per gallon on diesel. All of those factors combine to make this country less attractive to tourists. The Minister for Finance should do something to redress the wrongs in the areas of agriculture and tourism.
There has been much adverse comment on the recent announcement by the Minister for the Environment with regard to reconstruction grants. In their manifesto Fianna Fáil said they would introduce a scheme for house improvement grants. They did this and it was welcomed, but now they have decided to abandon the scheme. Even worse, they have decided to abandon all reconstruction grants and grants in respect of group water schemes have been reduced by 8 per cent. This will hit people of limited means. It will affect people who purchase their house from the local authority. It has been the practice that when tenants become owners they tend to improve or extend their premises. These people have modest means and they wish to make the best of their houses. Small contractors and builders providers are worried about the Government's decision. They know that their sales of building materials will decline. Even the individual block-layer, plasterer and electrician will have less employment.
I would hope that the Minister for Finance at some stage this year would introduce a supplementary allowance and give some scope to the Minister for the Environment to maintain the relatively good record he has established since he was appointed. It is very unreasonable to expect that he should carry the can when retrenchment is being made and he is not allowed adequate finance in areas with great scope for employment. I hope the combined wisdom of the Minister's colleagues in the Cabinet will enable them to understand that we have a nation of comparatively small farmers and many workers. In my own county 70 per cent of the farmers are in holdings of under £20 land valuation. You cannot continue depriving people of what they have been accustomed to and expect that the party responsible will hold its popularity. I am not clear whether the Minister for the Environment is responsible for the local improvements scheme. Are you responsible, Minister?
Yes.
I feel sorry for you, Minister.
It is a good job you are coming from Clare.
Through the Chair. The Deputy should not address the Minister directly; he can do that over the weekend.
I ask the Minister to put before the Government the fact that this year in Clare we are asked to accept £73,000 for local improvements schemes when last year we received £100,000. This is a drastic reduction.
Could the Deputy say what he got in 1976 and 1977?
No, I have not the figure with me. I have not the advantage of having officials, as civil servants of Departments, at my disposal. If I thought you would ask me that question I probably would have the figures.
I accept that.
They probably had not as many potholes there either.
The question should not be asked.
We intend to obey the Chair.
And I would advise the Chair not to come between the Minister and the Deputy.
Seriously, I am referring to this reduction which is not peculiar to Clare; others have had to accept reductions also. I shall attempt to show that it is a more serious loss to Clare. Everybody appreciates the importance of developing areas where we have energy. We can boast that we have turbary galore in our country, but in order to gain access to these places containing hidden energy one must in present transport conditions have an adequate road system. I would have expected that the Government would have thought it necessary to inject adequate capital for this purpose, even double last year's amount, in 1980 and show their concern for developing this energy by increasing grants. For some peculiar reason it is not done. I ask the Minister to use his influence in this area and at least to give some increase on last year's allocation.
You may have fewer roads to do.
As the Minister is aware, we have a very long list. When a three years' wait is involved and you get a reduced allocation you probably end up by doubling or trebling the delay. Meanwhile deterioration will increase and the outlay will be much higher. The Minister would be saving money if he were to divert money in this direction. Money is spent in areas in which some people doubt it is as advantageous as in the areas I mention. I hope the Minister will take particular note of my remarks and that we shall have some result.
We in the west experienced, particularly last year, the disadvantages of a prolonged Post Office dispute as a result of which tourism suffered. We had also hoped for improvements in the telephone system. I must say publicly that the Clare exchanges, even the manual exchanges, are equal to the best in the country. I have no complaints from any source about the standard of service provided by the workers. But the Minister for Posts and Telegraphs did not tell us and neither did the Minister for Finance tell us about the proposed increases. Why they were not mentioned in the budget the Minister knows best himself, but we can anticipate huge increases in postal and telephone charges during the remainder of the year.
All the increases which have been mentioned and those on which the Government have remained silent are contributing to an increased cost of living. In fact, they are wiping out some of the goodies which the Government announced. When you reach the stage that a person on a widow's pension, for example, will get three loaves of bread for £1 you wonder where the cost of living will stop or what social welfare increases should be given to compensate for the outrageous escalation of the cost of living.
I do not have to tell Deputies about the rise in the price of coal and the 20 per cent on electricity, all combining to make miserable the lives of people of very limited income. We had great hopes for education, that we would see in the budget some improvement in the raising of standards of our schools and the erection, where necessary, of replacement schools. We can remember when the former Minister for Education, Deputy Peter Barry, in his wisdom, decided some time ago that the journey to school for children of tender years would end and that rural schools—two-teacher schools in particular—would be retained. The present Government and their predecessor had conflicting views on that. They had in mind the establishment of central schools, with convoys of buses taking children of tender years to school every morning. In the light of the present energy crisis, Deputy Peter Barry had foresight.
We now find that finance to bring up the standard of national schools is not made available. We find too many schools in the country where basic hygienic facilities are not available—not even water or sewerage. Money is not available to bring about school improvements. This strikes at the very foundation of education in the primary areas. We may, however, have another budget in which there may be provision for the schools I have referred to, but at the moment there does not seem to be much hope of this.
I must express my disappointment and that of the farming community at the unequal share of taxes to be borne by the smaller man, which is resented. I hope that conscience will influence the people who have made those wrong decisions and that that, coupled with the activity which will be promoted by the farming organisations, will bring about a rapid redress of the wrongs in those areas.
In my contribution I intend to deal in particular with matters pertaining to my own Department of the Environment. We all realise the importance of this Department to our society and to our local communities in regard to improving standards of living and giving the necessary services to people throughout the country at local authority level. This year, between grants and the Public Capital Programme, my Department will be making available £540 million to local authorities paid through the Department. To make a comparison, three years ago, in 1977, this sum amounted to £281 million, so we are talking about virtually doubling the amount of money in the space of three years. This is a substantial increase in a short time. This is not the only money available to local authorities or spent by local authorities throughout the year. They have their own revenue also which they collect—rates and charges for services and so on—and the total amount will be £740 million this year, in 1980.
I presume that everyone is aware of the notification which I have sent to local authorities regarding the rating situation and the 10 per cent. limit. It is necessary to have a limit, as I am sure most rational people will agree. It is a budgetary matter and must be aligned to other Government spending within the context of the budget. It is necessary to have some limit on the increase in rates. Not only is it a protection to some extent for the Exchequer and the taxpayers, but it also serves as a protection for the remaining ratepayers, namely farmers, industrialists, business people and those who continue to be liable for rates. It protects people in these categories from drastic increases and from having to carry more than their share of the rates burden.
The Government and the Exchequer are now the biggest contributor to the rating system and the money spent. We are the biggest ratepayer now; that is what it amounts to. In 1976 the Exchequer, particularly on the agricultural grant, contributed £1 out of every £4 raised through the rating system. In 1980 the Exchequer's contribution will amount to £3 out of every £5, between grants in lieu of the domestic rate and the agricultural grant.
A liability of this size cannot be permitted to be open-ended, as I hope we all appreciate. To secure a fair alignment of local Government needs with those of other sectors, the limit has been imposed. This year, in 1980, the Exchequer will contribute a total of £144 million to local authorities in respect of rates on domestic dwellings, agricultural land and farm outbuildings, secondary schools and community centres. There is no question of local authorities expenditure being held back to 10 per cent, I should point out, over the 1979 figure. For example, in the past two years limits to rate increases were also applied. The limit last year was 10 per cent and in 1978, 11 per cent. In those years because of valuation buoyancy and other factors local authorities were able to budget in their gross current expenditure for increases of 17 per cent and 17½ per cent in 1979 and 1978 respectively.
This is a very important factor which must be borne in mind. These increases have enabled very significant improvements to be made in local authority services. I am confident that in 1980 local authorities by good management of their own resources will be able to maintain their services at reasonable levels, as they have done in previous years. In many areas there will be scope for real worthwhile improvements and, as I have explained, the 10 per cent is not strictly 10 per cent.
Some councils have criticised this, but it should be remembered that only three years ago the rating authorities were striking the rate themselves. As far as the authority was concerned the percentage increase could have been regarded as open-ended. The last time they struck a rate was in 1977. I will give some examples of the figures for different counties and the percentage increases decided on in that year. Cork Corporation's rate increased by 5 per cent and Kerry County Council's—where they seem to have had a big problem earlier this week with regard to striking the rate—increased by 5.2 per cent. Very few went over 10 per cent. Dublin County Council increased their rate by 5.5 per cent in 1977. Critics should be reminded of the fact that when they had freedom to strike a rate they imposed an increase of between 5 per cent to 10 per cent. The restriction which I am held responsible for is not as grave as people try to make out. With buoyancy the increase is far more than 10 per cent. The rates are not placing the restriction on counties that some local authorities would have us believe.
As regards the building industry, output grew very rapidly in 1978 and 1979. A growth rate of over 14 per cent was achieved in 1978 and an estimated growth of 12 to 14 per cent in 1979. Some 10,000 additional jobs have been directly provided in this industry since July 1977. An estimated 3,000 further jobs have been provided in ancillary industries such as building materials, manufacturers and suppliers. Despite economic difficulties the Government's commitment to the industry continues into 1980. The overall Public Capital Programme in 1980 is estimated at £1,154 million which represents a 15 per cent increase over last year's level. The increase in the portion of the Public Capital Programme which directly affects the building industry is greater, at more than £722 million, 18 per cent higher than in 1979.
The remarkable growth in output since 1977 has been a great boost to the confidence of an industry which had previously gone through a very severe recession. It also brought its problems. The evidence of over-heating towards the end of 1978 became more obvious in 1979. There were widespread shortages of labour and some materials. This led to worries among people in the industry about the capacity of the industry to cope with continuing very high levels of annual increases in output.
Housing is the most important sector of the building industry. The number of new houses completed in 1979 was 26,544 compared with 24,000 in 1976, 24,548 in 1977 and 25,444 in 1978. This improvement in the number of new houses results directly from housing policies which have been pursued by the Government. Capital provided to finance the housing programme has increased from £100 million in 1977 to £159 million this year. The Public Capital Programme allocation for housing has been increased in the current year to more than £182 million. This amount is the second largest allocation to any sector in the programme. By contrast I can recall that public capital expenditure on housing dropped from £115 million in 1975 to £105 million in 1976 and to £100 million in 1977.
Home improvements grants have been mentioned in the debate. The Minister of State in my Department dealt with this during the week in Private Members' time. I should point out that, apart from discontinuing the home improvements grants, as announced in January we increased the loans available for house improvements. One can now get an unsecured loan of up to £1,000 and with reasonable security up to £4,000. People who qualify for these grants are not left bereft of any moneys to carry out the necessary improvements. A lot of money allocated was used for unnecessary improvements although many people really needed to extend their premises by building extra bedrooms and so on. Some improvements were not as necessary as we would have liked them to be. It is a question of spending the money available for housing in a manner which would be more beneficial to the people really in need.
We also increased SDA loans from £9,000 to £12,000. We increased the income limit to £5,500. When I became Minister in 1977 the income limit was £2,350. That is an appreciable increase and makes it possible for people to provide their own homes, as most Irish people wish to do. The same increases apply to the low rise mortgage scheme, which is a worthwhile one. As people living in rented local authority dwellings avail of this scheme, more local authority houses become vacant and are available for those who cannot build their own houses.
What about availability of bridging loans?
That should be discussed with the Minister for Finance. It is his responsibility. We made £10 million available for bridging finance at the end of last year, which was a help. I do not hear as much criticism of the non-availability of bridging loans as there was, say, at the end of last year.
Is that a suggestion that if we know of hardship cases we should contact the Minister's Department?
I do not pay any bridging finance.
Of course, the £1,000 new house grant continues for those who qualify; that has not been discontinued. With regard to local authority housing we have undertaken to keep the level of building as it was for the last two years. Last year we built a total of just over 6,200 local authority houses. We intend to keep up that level of building during the current year. My colleague, the Minister of State in my Department, dealt extensively with housing and so on this week, I shall not go over that ground again.
I am glad to be able to report to the House that significant progress has been made in the provision of water and sewerage services. Since I became Minister in 1977 the capital allocation for public water supply and sewerage schemes has been increased from less than £25 million in 1977 to £40 million in 1980, an increase of over 60 per cent. I have been able to approve, for commencement, a total of 123 major public schemes estimated to cost £85 million. Also in 1979 I increased the cost limit for small schemes from £20,000 to £30,000. To finance this greatly increased level of investment the Government have availed of every opportunity to procure financial assistance for water and sewerage facilities from EEC sources. In the last two-and-a-half years or so the EEC have approved grants totalling £11.4 million from the European Regional Development Fund for public water and sewerage schemes. In that period grants totalling £2.6 million have been approved from the European Agricultural Guidance and Guarantee Fund, FEOGA, for public and private rural water schemes. Loans totalling £128,500,000 from the European Investment Bank have been approved for public water and sewerage schemes. Many of these loans will qualify for interest subsidies arising from our membership of the EMS.
Naturally the increased flow of finance to sanitary services is having an impact at local level. Major schemes now in progress include the greater Dublin Drainage Scheme at a total estimated cost of £36.5 million and the Liffey Aqueduct Water Supply Scheme at a total estimated cost of £9.8 million. These two schemes should cater for the water and sewerage requirements of Dublin into the nineties and can be expanded to cater for longer term requirements.
The Government have ensured that, in catering for the needs of Dublin, the needs of other areas have not been overlooked. Major schemes in progress in other areas include the Cork City and Harbour Water Supply Scheme, at an estimated total cost of £42 million, the Shannon South Shore Water Supply Scheme, at an estimated cost of £6.6 million, and the Castlebar Water Supply Scheme at an estimated cost of £8 million.
There has been a tremendous upsurge in the number of private group water supply schemes by local communities with generous grant assistance from the Government. The Government have substantially increased grants for these schemes from a maximum of £200 per house to a maximum of £300. An additional grant of up to £200 is payable for farm supply. The Government have taken over liability for supplementary grants formerly payable by local authorities, thereby relieving ratepayers of the financial liability that involved.
As a result of these Government measures State expenditure on group scheme grants increased from £1.1 million in 1976 to £4.3 million in 1979. The number of domestic water installations, by way of group schemes, has increased from 6,187 in 1976 to 10,940 in 1979, or by 77 per cent. The future prospects for group schemes are bright. At the end of 1979 work was in progress on schemes to provide piped water for approximately 8,200 additional houses and nearly 200 schemes have been designed to serve a further 6,850 houses.
Deputies will be aware already of the Government's commitment to the improvement of the public roads network. The Road Development Plan for the eighties outlines the priorities for State investment in this area. The Vote provision of £47.969 million for road grants in 1980 provides for continuing progress along with the maintenance and improvement programme, particularly in relation to the national routes, in line with the objectives of the plan. On foot of this provision I have been enabled to allocate grants totalling over £53 million this year. Compared with the level of grants in recent years this represents a significant commitment by the Government to tackling the deficiencies in our roads system. The recent deterioration in the maintenance standards of some of the principal roads has been a source of great concern to me and my Department. The factors contributing to this situation—weather conditions, costs, increased numbers of heavy vehicles —make it imperative for road authorities to have a greater awareness of the urgency of remedial measures. The Road Development Plan has identified, as a priority, the preservation of the road infrastructure to a satisfactory level of service, thereby ensuring continued benefit from previous investment in the roads network. The other consequences of a poor standard of maintenance, particularly on heavily trafficked roads, will become readily apparent in increased fatalities, serious injury to road users and in damage to vehicles. In conjunction with the notification to road authorities of the grants for 1980 I have brought especially to the attention of each city and county manager the urgency of the maintenance problem and the importance of early identification and treatment of deficiencies. In that context I am particularly pleased that I have been enabled to make grants for the maintenance of the national routes totalling £9.3 million, representing an increase of more than 40 per cent over the normal maintenance grants allocated for these routes last year.
During my term as Minister for the Environment I have given much consideration to the promotion of safety on the roads. Positive steps I took towards that end include amending legislation on drunken driving in 1978 and, later, measures for the compulsory use of seat belts and crash helmets. I am glad to put on record that additional moneys which are being made available this year to the Medical Bureau on Road Safety, which carries out analysis in connection with drunken driving suspects, and the National Road Safety Association, which organises programmes and publicity on road safety, will enable both bodies to carry out their activities on an increased scale.
The exceptional provision made for the local improvement schemes in 1979 enabled local authorities to go a long way to catching up with outstanding work. Returns which I received showed that applications on hand have been considerably reduced. Nevertheless, I am pleased that we are able to provide a further £2 million for the service this year which is of such benefit in particular to our western counties where the need is greatest.
A budget debate tends to be concerned for the most part with practical financial and economic matters. That is inevitable, but these are not the only important considerations in our modern society. Good environmental conditions are more highly valued now and more in demand than in earlier times. Many of the major financial provisions in the budget have environmental implications. Industrial and agricultural developments, housing, roads and sanitary services can have far reaching environmental consequences. Environmental conditions in our country are not without blemishes and black spots, but the condition of our natural resources and amenities and the quality of air and water over the country as a whole cannot be equalled in many countries which have higher material living standards. We have to be careful to maintain the good quality and to act to restore the position where damage has occurred.
The growth and movement of population, the expansion in industry, the changing patterns in industry, the increase in tourism and so on are in themselves all healthy developments, but they can and will bring additional environmental pressures and we have to be geared to deal with those pressures. The Government are responding to this need. As the first Minister for the Environment I have been assigned the general responsibility to promote the protection and improvement of the environment. I have been entrusted with the specific function of preparing for Government approval proposals for a national environment policy and keeping this policy under review. Such a policy would formally indicate the objectives to be achieved. It would be a means to ensure that the needs of the environment are given adequate consideration when major decisions affecting it are made.
The Environmental Council which I set up to advise me generally in this area have already furnished a preliminary assessment of what is involved in their report, Towards an Environment Policy. This document has been published in order to encourage public debate. The report has been widely distributed and is at present being re-printed. Frankly, I would have hoped for more public attention being given to the report, especially by the media, as a positive development of genuine public interest. I have written to the council encouraging them to continue to expedite their work in this area. I expect to have definitive advice from them on the question of policy later this year. I will then consider what further decisions and commitments in this area will be appropriate. We have to be sure that our own legislative system is developed in line with the new needs. The legislation on the physical planning system and on water pollution has been updated and improved in recent years. Other aspects of the control system, those relating to waste collection and disposal, air pollution and noise abatement are being examined to see what further improvements are needed.
It is my intention to bring forward proposals for additional legislation in this area as soon as possible. The collection and disposal of waste poses serious environmental problems. The problem tends to grow with population increases, greater urbanisation and economic development. There is one aspect to which I wish to refer, the European Community's regulations of 1979 which I made on 7 December 1979 and which will come into force on 1 April 1980. Those regulations give effect to the EEC framework directive on waste which is designed to ensure that human health and the environment are protected against harmful effects caused by the collection, transport, treatment, storage and tipping of waste. As from 1 April it will be an offence for a holder of waste to permit its disposal by any person other than a public waste collector or a person holding a permit under the regulations.
Any person who decides to dispose of waste himself must do so in a manner which will not endanger human health or harm the environment. The responsibilities of local authorities in regard to waste have hitherto been limited to household waste. They are extended by the regulations to all types of commercial and industrial waste, with certain limited exceptions. Local authorities will be obliged to prepare waste disposal plans for their areas. They are empowered to issue permits to persons for treating, tipping or storing waste on behalf of other persons and to supervise the collection and transportation of waste. My Department have issued detailed guidelines to local authorities regarding the regulations. I have asked that local authorities adopt a co-operative approach with the private sector disposal industry. The respective roles of the local authority and the private sector in waste disposal are complementary. The provision of adequate facilities for the disposal of industrial waste is an essential part of the infrastructure required for the establishment of new industrial projects. My Department have requested local authorities to pay particular attention to the need which exists for such provision to be made in their waste disposal plans.
Many worthwhile schemes have been carried out under the environmental improvement schemes programme, which has now been in operation for two-and-a-half years. Subject to certain guidelines, the selection and execution of works has been the responsibility of local authorities. Works undertaken have been of environmental, recreational or amenity value to the community. They have included the provision of parks, open spaces, playing fields, playgrounds, other sports facilities, picnic sites and car parks in areas of scenic attraction or recreational utility The works carried out have mainly been of continuing rather than temporary benefit. To a significant extent most of the more pressing needs have now been met. The need to curb expenditure on services not absolutely essential will mean some contraction of the environmental improvement schemes in 1980. A total of £3.2 million is being provided in 1980 of which £1,500,000 features in my Department's Estimate. The Tripartite Standing Committee on Employment set up under the national understanding have approved of the allocation of £1.7 million from the special employment guarantee fund for environmental works. This money is expected to provide employment of 250 man years, largely for young people.
An adequate level of investment in the fire service is essential for the protection of life, of property and of employment. The capital allocation for fire stations and equipment has been increased significantly in the past few years. It is my policy to promote the development of all aspects of the service in order to enable it to meet the growing demands being made on it. This year's allocation will enable local authorities to press ahead with their programmes for the provision of urgently needed fire stations and for the acquisation of modern fire-fighting equipment. As a measure of the progress being achieved I should mention that 12 new fire stations or extensions were completed during the past two years, that nine are at present in the course of construction and that a further 12 are expected to commence this year, In addition, there were approved by my Department in the past two years proposals for financing the purchase of 34 new fire appliances.
I have endeavoured to outline the main provisions of the budget that concern my Department. As I have pointed out, there are not any serious cut-backs though some people maintained when the Book of Estimates was published that there were cut-backs. Instead there are substantial increases in all sectors with the exception of local improvements and environmental schemes in respect of which there is a small decrease. The local improvements schemes were at a standstill up to 1977 but they were revised by this Government. Since then much work has been carried out by the local authorities in respect of roads which come under these schemes. The number of outstanding schemes has decreased considerably in the past couple of years. I should have been more happy if additional moneys could have been made available under the scheme in some counties, but we have endeavoured to make the money available in areas in which the need was greatest.
Much excellent work has been executed, too, under the environmental schemes. These schemes were of a temporary nature and were designed to create employment. They were effective and they are not being cut-back completely as there is still some money available for them. This will enable much work to be effected in the current year.
The allocation to local authorities of the sizeable sum of £540 million, or twice the amount that was made available to them in 1977, is a manifestation of the commitment on the part of the Government to enable local authorities to provide services for the people at local level, service to which people are entitled. It will be seen then, that again the Government are being very generous in the provision of moneys for such work as road structure improvement and the provision of water supplies.
The 10 per cent increase in rates has been criticised, but as I have pointed out the buoyancy in each local authority would be much greater than 10 per cent. Although domestic dwellings have been derated, new houses continue to be valued by the Valuation Office and my Department are responsible for paying the rates on these new buildings. In some areas the buoyancy is as high as 18 per cent. When the local authorities were striking a rate in 1977 they were very reluctant to strike an increase of the order of 10 per cent. Very many of them were striking a rate of increase of 5 or 6 per cent and up to 9 per cent in some cases. This was at a time when they had freedom to do so. Having regard to the buoyancy situation the 10 per cent increase is a generous allocation. Before people rush in to criticise in this area they should have regard to their own records when, as members of local authorities they were striking rates. They should compare what happened then with the increases of the last three years of, respectively, 11, 10 and 10 per cent. These controlled increases protect the rated sector such as farmers, business people and others who still pay rates. These people will not be called on to bear any part of the burden of the rates for which the Exchequer assumed responsibility when we were returned to office.
First, I wish to comment generally on the budget and then to consider some aspects of it in greater detail. While we are discussing the annual budget we are in the difficulty that every other day there is what amounts to a budget. I condemn strongly the way in which the Government since being returned to office have been gearing people to expect harsh budgets. We have had the Taoiseach and the various Ministers telling the people that they must tighten their belts, that the situation is bad and that we must live within our means. Prior to this year's budget each Minister was engaged in making his own contribution to the production of a reasonably favourable budget. In his Clarecastle speech the Minister for the Environment announced that the Exchequer would benefit to the extent of about £20 million as a result of the discontinuance of the reconstruction and repair grants for houses. I shall deal with this change at a later stage. The Minister's attitude in this regard would seem to be indicative of the way in which the country's finances are being managed.
It would be wrong to say that there are not some people who will benefit from the budget. I have conceded already that in some areas there are worthwhile concessions, but it would be unforgivable of me to say that the budget tackles in any worthwhile or effective way the problems of our economy. The budget has fuelled the fires of inflation, and in respect of job creation and of our greatest industry it will do untold damage while in other areas it will not have any effect one way or the other.
There is another matter which worries me slightly. In recent years budgets have seemed to favour groups with the strongest muscle. This was most pronounced after last year's budget in which the Minister decided—in my opinion it was daft—to introduce the 2 per cent levy on farmers. The farmers took to the streets and brought organised pressure to bear on the Minister. Some of his backbenchers rebelled, and the Minister had to do some rethinking. In a period of three months the levy was on, off and on again. Eventually the Minister capitulated in part and went back on his budget speech.
We had PAYE workers in the streets. On the day of their march I had occasion to drive through about five towns in County Cork to attend a local authority meeting and it was frightening to see the numbers in the streets demanding PAYE relief. Because of that pressure, because of the collective strength of the PAYE workers' organisations, the Government rushed to their apparent rescue.
All this makes it appear that if any group have the numerical strength all they need to do is to take to the streets and put on pressure. Therefore, it looks as if groups who are sufficiently numerous and who have sufficiently strong organisations will succeed if they show their strength and that those who are weak will not succeed. It is an undesirable trend which has created a very bad image of the Government, particularly since 1977. It has projected an image of Government weakness at a time when Fianna Fáil have 84 Dáil seats.
What is needed is a Government of moral courage who will not take decisions simply because they will be popular and perhaps buy votes. A Government should take decisions even if they are unpopular. It is very easy to govern if you do not take unpopular decisions, if you take the line of least resistance, but the long-term interests of the country may demand otherwise.
Earlier I spoke of inflation and the effect of the 20p a gallon increase on petrol. The Minister for Finance described this as a discretionary tax. I am surprised because the Minister for Finance was elected in a constituency largely rural. He must realise that this increase in the price of petrol will be detrimental to most people in rural areas because it will affect every industry, particularly the major one of agriculture, and it will start off another spate of wage and price increases. In rural areas workers have to travel up to 26 miles to get to work, for instance, in Castlemore Brickworks in my constituency, and this increase in the price of petrol will cause considerable hardship.
When we talked about increases in oil prices we blame the Arabs. They are not the only cause of the inflationary spiral, because when we find Ministers contributing to increased prices we must blame them, too, for inflationary trends and we must say that we have some Arabs at home as well. The Taoiseach has made the frightening statement that inflation may be running at 20 per cent before 1980 is out. I describe it as frightening because it will affect the entire economy.
The Minister for the Environment who has just finished his speech —modesty has never been one of his strongest points—went through a long list of water and sewerage schemes completed and extra houses built, and he compared all this with the achievements of the Minister for the Environment in the National Coalition, particularly in the earlier part of 1977. He spoke of the statutory limit of 10 per cent imposed on local authority financing. He referred to the time when local authorities were free to strike their own rates and he said that in those days they did not come near a 10 per cent increase.
I agree it is necessary to impose some control, particularly when a smaller number of ratepayers are paying larger amounts and when people are put to the pin of their collar to pay higher rates. However, it is wrong to impose a 10 per cent limit at a time when local authorities are faced with a massive backlog of work and when they need more money to get it done.
One would think from his speech that the Minister is unaware of the problems cited by Deputy Taylor earlier, particularly in regard to roads. Not so long ago, after seven requests the Minister met a deputation from Cork County Council in regard to the allocation of money for roads. We were looking for an increased allocation for county roads in particular. I do not wish to score any political points when I appeal to the Minister to do something about our roads which are so bad that it will take a massive injection of capital to improve them. One could shelter from a shower in some of the potholes in our roads in County Cork. Indeed it has been said of them that if your car hit one of the potholes it would go into orbit.
Therefore, I do not think the Minister for the Environment can boast of achievements in the past three years.
Every member of a local authority is aware of the problem of pollution. I know the Minister is concerned about the matter and is anxious to help. In many areas raw sewage is pumped into rivers because of the lack of money to provide proper treatment plants. This is happening in County Cork and the Minister knows it. I am glad that the Minister dealt with the question of refuse collection because this is creating problems for the environment.
I am a member of a local authority and have been chairman on a number of occasions. I am sure the difficulties we encounter in Cork are not peculiar to that area. One problem is the acquisition of sites for properly controlled refuse dumps. We must make sure that people will not have to take to the streets again to demonstrate against the location of dumps. This is an important matter that must be tackled. The record of the Minister and the local authorities in this area is not good. They should insist that refuse dumps be properly controlled and supervised and not pollute the environment.
I am concerned about the Government's decision to discontinue reconstruction grants from 1 February. I do not care what the Minister said with regard to other areas where money is being provided. One cannot get away from the fact that in 1978 there were 60,000 applicants for reconstruction grants. The Minister of State present has experience of local authority matters and I am sure he will agree with me that the question of housing for young married couples is an important one. Even though the reconstruction grant was never very attractive, at least it was an incentive. There was also a reconstruction loan available. Many young couples on finding that they could not afford a new house reconstructed old rural cottages with the aid of a grant or a loan. This gave them a reasonable home.
I am sure the Minister is aware of the problems faced by couples with young families who have to live in mobile homes. In County Cork a family must be on the waiting list for a house for two to five years. I do not know what is the position in some of the larger cities; it appears a family would nearly need a football team to qualify for a house. I know the situation existing in my part of the country because I am chairman of the Southern Housing Committee of Cork County Council. Members of local authorities are approached every day by people who are living in squalor, in caravans and in mobile homes, in which they must rear their children. It was a disastrous step to discontinue the reconstruction grants because it has removed from our housing pool a number of old houses that will not be repaired now. When we are discussing the Estimate for the Department of the Environment I shall deal in detail with water schemes, particularly group water schemes, and the problems confronting many of those engaged in such work.
Much has been said about the concessions given to old age pensioners, to the PAYE sector and to the other reliefs granted in the budget. In my view the budget was anti-farmer and anti-rural. Once again there is the threat on the part of the farming community of a reaction to the resource tax and the prospect of a repetition of what happened with regard to the 2 per cent levy. It does nothing but damage when people take to the streets. It gives bad example to young people for whom we are trying to provide employment. We want to encourage them to be law-abiding citizens. The farming community have got a raw deal from the Government.
The Minister for the Environment created further problems for the farming community when he reduced the threshold for the agricultural grant to £40. I have a question down to the Minister asking about this matter and inquiring about the amount of revenue to local authorities in any given year. I know that in County Cork the income from that would be approximately £880,000 in one year. Farmers with a valuation of £40 do not know that their rates increase will mean they will be paying more than £300 extra rates in County Cork as a result of the removal of that grant.
I want to ask the Minister for the Environment, as a result and arising from the Supreme Court decision in the recent Murphy case what is the position where you have a farm in joint ownership of husband and wife of over £40 land valuation. What effect will the Supreme Court decision have on that sort of situation? Further, what is the position in regard to two farms held in ownership by a husband and a wife? Is there to be an aggregate or are they entitled to be assessed separately for rates purposes? It does not matter whether it is rates or tax, whatever way it is paid it is an imposition on the farming community. A £40 valuation does not represent a very big farm and in my opinion it is a severe hardship on those who will be called on to pay up.
Generally on farm taxation, I believe farmers should pay their fair share but nobody has yet defined "a fair share". Even though the Minister for Finance spent considerable time talking about equity I do not think this budget will be remembered for equity in imposing taxation; I think the budget contains some inequities. I am pleased that the Minister—this is a personal view —decided to provide a mobile tax advisory service for people and farmers in particular who are coming into the tax net for the first time. There is considerable confusion and there is fear of the unknown among the vast majority of farmers. They are neither trained nor accustomed to keep accounts; they work hard; they are not good at books and do not keep accounts. They are terrified that a tax inspector will descend on them some day and that they will be in difficulties in trying to provide the necessary documentation and so on required by those people. I am glad they will have access—free of charge I take it—to an advisory service that will inform them about their tax position and that there will be an easing-in of people coming into taxation for the first time.
I am inclined to question, in relation to the farming community, tax on accounts. I have a personal view on this. The State and everybody in it owe a deep debt of gratitude to progressive farmers who have used their resources to produce the maximum from the land they possess. There are too many producing the minimum from valuable resources which the country can ill afford not to use fully. I am dealing in particular with the dairy industry. Many progressive dairy farmers have now achieved more than a cow per acre. They work hard and there is a family input. Anybody with experience of dairy farming will agree that at this time of year there is no end to the hours a farmer, his wife and very often young children will contribute to the enterprise in which the more they produce the more they pay in income tax. We owe nothing to the land owner whether resident or not; we owe nothing to people who sit on a valuable resource and do nothing with it. I therefore say that our tax code should be so geared as to ensure that it will act as an incentive to increased production rather than a disincentive. I believe that a disincentive in farm accounts can and will create a drop in production.
The Minister in his speech said the resource tax will be introduced at a valuation of £70 and over and he said the threshold will not be changed for three years. I think that is rubbish because the Minister does not know whether he will be there for that time. If you go back to the manifesto of 1977, which is well remembered by every farmer who feels betrayed by it, there was a commitment there, in order to get votes from farmers, that the notional system would remain and that it would be optional and that there would be a fairer system of taxation for the farming community. That has gone by the board and how does the Minister expect, with that background, that the people will accept this from him? The thresholds will not stay at £70 or at £40; like everything else, they will keep closing in to bring in more and more. That is the attitude of the present Government.
I forecast at the beginning of the year that there will be a serious drop in milk production. That will have the effect across the board of reducing job opportunities and employment which are very important factors. The jobs created from the agricultural industry are good jobs if the raw materials are produced from the land and are not dependent on imports. We should therefore try to promote the industry and encourage expansion in it so that the necessary jobs will be created. That is not happening; the trend is the other way. I know there are other factors outside the control of the Minister such as disease eradication which has particularly hit the dairy industry. If you have somebody producing 100 gallons of milk a day who can, if he has the resources and facilities, produce 150 gallons a day, then by so doing there is right through an increase in jobs through more people employed, fertiliser producers and handlers, farm machinery owners, in processing, manufacturing and transport. Everybody benefits.
I did not like the attitude of the Minister for Agriculture yesterday and his arrogant approach to farmers' problems. When we had a recession in 1974 we turned to the agricultural industry and it saved us. We should be giving it every incentive and encouragement possible and providing a tax system which would not act as a disincentive. While farmers are talking about coming into the tax net for the first time, whether this is on or off, you have the artificial manure subsidy abolished, lime transport subsidy abolished, the beef cattle incentive scheme abolished, inheritance tax, which of course is adjusted now, the 2 per cent which was on and was off, a levy for disease eradication to be paid by farmers; dairy inspection charges introduced, a dramatic increase in rates with the removal of the agricultural grant down to £40 valuation as proposed by the Minister for the Environment; you have the levy imposed on State funds to the CBF drastically cut, the inactivity of the Land Commission due to lack of funds.
You also have the new super levy proposed by Mr. Gundelach, an increase in labour costs, in ESB charges, fuel charges and so on for the farming community. I think it is necessary to have a system where all those things could be abolished and at the beginning of any year a farmer would be able to say: "I have to pay so much; I will meet it. The incentive is there to create and work harder so that the demand can be met and anything over and above that tax is my own." Whether it is a question of rates, of levies or tax, the farming community at present do not know where they stand as regards the contribution they must make to the local authority or the Exchequer. These are the things I would ask the Minister for Agriculture, the Minister for Finance and the Government to consider because the future of our primary industry is involved. Farmers were misled by the Fianna Fáil manifesto in 1977 which gave certain guarantees that were not honoured at a later stage.
Debate adjourned.