Dáil Éireann debate -
Tuesday, 25 Mar 1980

Vol. 319 No. 3

Financial Resolutions, 1980. - Financial Resolution No. 19: General (Resumed).

Debate resumed on the following motion:

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

—(Minister for Finance.)

Mr. Keating

Incredibly, we are still debating the budget. The primary characteristics and weaknesses of the budget have been discussed substantially already. They relate to the failure of the budget to protect the Irish £ by getting Government finances and our balance of payments into order, the dropping and eclipsing of the much talked about and much vaunted employment creation targets of the Government, which hitherto were the single feather in the Government's cap, failure to increase incentives to output and work, any real commitment to halting and, indeed, reducing inflation and the lack of the basic philosophic but important element in any budgetary strategy—commitment to social justice. Some of those elements have been discussed already and I shall not repeat the criticisms put forward. I do not intend clouding the issue by using economic jargon. On the issue of prices, the budget and the Government have created and are creating a prices holocaust which is unprecedented and is affecting every housewife and citizen. No amount of double-talk or soft-talk can disguise the fact that the rate of increase in the price of basic foodstuffs and purchases by the housewife is unprecedented. Worse than that is the fact that the Government, prior to the General Election of 1977, committed themselves to some sort of an attempt to tackle that subject. Not only have they failed to do this but they did not even make passing reference to the need to implement the promises in the manifesto in that regard.

One of the foundation stones on which stability in industrial relations, economic progress and growth of the economy must be founded is the question of orderly increases or, indeed, a freeze on prices altogether for a period of time. Instead of that we have had a cavalier approach to price increases by the Government. The approach is cavalier in so far as not merely does it not make any passing reference to the need to control the rate of increase but it blithely increases the cost of many essential items for the housewife by 20 per cent and upwards. The Government, to use the infamous phrase, have stood idly by while witnessing the increasing of prices on such things as heating, foodstuffs and so on by massive amounts. A matter of weeks ago a cylinder of gas was increased by 77p.

The cumulative effect of this failure to even confront the raging increase in prices is to leave the impression in everybody's mind that the Government do not have the slightest interest or sincerity of concern about the attempt to curb inflation. The predominant feature of the budget will be to send inflation soaring upwards at an unprecedented rate, and more people are increasingly appreciating the way the budget is seeping through the economy. We must bear in mind that we have not got most of the price increases yet; many more increases will come into effect on 1 May. A lot was expected from the new Taoiseach and his reshuffled Cabinet but by 15 May prices will have risen by 9.8 per cent in the shops, just four months after the new Taoiseach took office. Figures released last week by the Central Statistics Office show that the £ in the pocket of the housewife and ordinary citizen is worth almost 4 per cent less than it was four months ago. For the quarter up to 15 May price rises are sure to leap by another 6 per cent. From a period scarcely three weeks before the new brush was to sweep clean up to 15 May there is certain to be an erosion of about 10 per cent in the spending power of the ordinary housewife.

One shudders to think what will happen if that is to be the pattern for the remainder of the year. There has not been as much as one note of concern in the budget about that situation, apart from the mealy-mouthed platitudes and appeals to workers to cut back on requests for increases in salary while the cost of basic foodstuffs and everything else is being allowed to soar through the roof. That is hypocrisy and double-think and it is doomed to fail.

The people of this country would be willing to respond to the demand and the requests of leadership, would be willing to tighten their belts in tune with a Government who really meant business, and would be willing—as they have been in the 50 years history of the country—to wear the hair shirt if they could be convinced that there was sincerity behind the request. The only answer to the figures produced by the Central Statistics Office last week has been to throw cold water and to deny the undeniable, to say that black is white and for the Minister for Industry, Commerce and Tourism to pretend that inflation is going down. Maybe he believes that but the people out there do not and no one else does.

The increase in the 20 per cent VAT rate to 25 per cent will apply from May. It covers a wide range of items. One would assume that most of these would be in the luxury category but the definition of luxury leaves a little bit to be desired. These increases will apply to such luxuries as beds and bedding. I can think of many of my constituents who would not call a blanket a luxury and should not be asked to pay 25 per cent extra on it either. It will apply also to buttons for jackets and suits and coats. A button is a luxury as also is a zip; the implications of that would be laughable if there was not a serious economic or social side to the thing. Cutlery, delph and glass ware, detergents, and disinfectants are also included as luxuries. The housewife of today, cleaning her kitchen or bathroom, or maybe even the husband in these enlightened days, is now to find that detergents or disinfectants are luxuries. Educational supplies, excluding books and calculating machines, are luxuries and are going to be increased by 25 per cent in one jump. Joinery, kitchen equipment and utensils, light fittings, polishes, rugs, sacks, soap, stationery, wallpaper, wrapping materials and many more items are going to be increased by 25 per cent and we have then a Government who ask us all to sit back in some sort of spirit of national altruism or patriotism and to join with them in some massive assault on inflation. The people here are willing to do that but not in the face of hypocrisy of that level.

Let me remind this House that in 1977 when the Government opposite went hawking around the country trying, at any price, to get into power they promised nine different steps to deal with prices and they were as follows:

The Prices Commission will be carefully and thoroughly examined, and restructured and brought up to date, as it is widely believed to be inadvertently protecting inefficient firms and in itself to be incapable of proper investigation of many applications made to it. Frequently these are for far more than the firm really needs and the increase granted is often for more than the firm ever expects.

Will the Minister tell me if anything has been done about this promise or about the allegations, scurrilous in essence, levelled against the National Prices Commission at the time? The second step was that,

Government policy must be directed towards discouraging increased costs and prices in all areas where it has control or influence. The policy has been absent in the last four years.

The Government have complete control in relation to VAT but put it up by 25 per cent on luxuries such as soap and disinfectants. The third major promise was to

Investigate middlemen's margins in areas where there is an inordinate difference in the price obtained by the producer for certain products and the price paid by the household for the same, e.g. fish, vegetables etc.

We are all waiting for this investigative approach to middlemen's margins. I do not think it will ever come because there are far too many middlemen far too close to those who would be apparantly purporting to set about the investigation. We were to have

Full dissemination, at least once a week, to radio, television and newspapers of comparative prices of the most frequently purchased consumer goods in supermarkets etc., in different parts of the country.

That was a very laudable aim. The only step that was taken in that regard was to reduce the amount of advertising of increases in the media. Another categorical assurance has been cynically discarded and, it is hoped by the Government, forgotten about. We were to have

Control by legislation, in the interest of the consumer, of monopolies in particular, and of take-overs and mergers where relevant.

We were to have the abolition of

the seven day rule arising out of the outer UK zone, in respect of fuel price increases, as there is no price control at all under the present system.

We were to have a full investigation of

why Northern Ireland prices are less (apart from tax reasons) than prices in the Republic for the identical product from the same supplier and the same factory.

We were told seriously that

Fianna Fáil regard price control as an important matter and will therefore revert to the position where a Member of the Government is responsible for it and for dealing with the underlying causes of inflation.

The fact that a member of the Government is responsible is simply not solace enough. It would be reasonable for the housewife to assume that the responsibility would be accepted and responded to by some sort of appropriate action. We have a Minister responsible for it but that seems to be the end of it. We were told also as an after-thought that

The accounting procedures of the ESB will be examined and brought up to date with a view to reducing the price of electricity.

If most of these points were not essentially somewhat tragic and essentially denigratory of the whole parliamentary and electoral process they would be laughable because every one of them was quite clearly nothing more than a cynical manipulation of the will and the voting intention of the electorate and every one of them has failed to elicit the promised Government response nearly three years into Government on the central issue of the day and the central issue of the budget which is inflation and the rampant increases for the housewife and for the consumer generally. There is not one word about them. Indeed, worse than that, if anything can be worse than it, is that not merely are we to grovel in shame at the absolute reluctance and failure of the Government to carry out the programme they committed themselves to but we are to find ourselves very soon, on 15 May, at the bottom of the European league when it comes to inflation, lower even than the lowliest. The figures from the Central Statistics Office show that the overall consumer prices which rose by 3.8 per cent in the £ during the three months to mid-February and will rise by a further 6 per cent up to 15 May will therefore result in a total increase of 15.5 per cent during the year. This puts Ireland well up in the EEC league table. Only Britain, with 17.2 per cent, and Italy, with 18.8 per cent outrank us, but with the budget prices increases which have to be added to that we will dominate the shameful position of being the lowest of the low, a country which demographically is small enough to manage properly, which by virtue of its healthy agricultural product and output could undoubtedly commit itself to sustaining basic foodstuffs and basic food requisites for its domestic population substantially to impact in a very real way on food prices which other countries cannot do.

The Government then want the trade union movement and the worker to join with them in what in itself is commendable, an attempt by all of us to accept that there are no easy options and that we have been living prosperously. If there is honesty in this House, it must be admitted that the major impetus in that direction in the last two-and-a-half years was the promise to deliver on this package of promises. Unfortunately it was the cheaper and the easier promises that were pursued in the initial stages. I would agree that we should all join to try to bring this country out of the prices and inflation spiral in which it now is, but much more genuine efforts than the accountancy exercises of the budget will be called for if that is to be the case. The trade union movement see the writing on the wall. Mr. Ruairí Roberts, the General Secretary of the Irish Congress of Trade Unions, commenting on the Minister's statement on Sunday on the radio, clearly indicated that they would take a tough stand in any future national understanding if there was to be any suggestion of dismissing or dropping any of the points in such understanding. There would have to be clear index-linking built into it so as to safeguard people against the actions of a Government bankrupt of ideas and nearly bankrupt of money.

The firm belief of my party and of any rational, observant member of the public is that prices will increase in the coming 12 months in a way we have never seen before, not this time because of any international recession but because of Government mismanagement, because of borrowing which was not used for the right purposes and a settling for the middle course on the question of whether borrowing should be cut back more or less. The answer to all this is that there were massive increases in social welfare payments. I do not pretend to be an expert on poverty in this country but I have had an opportunity to discuss the issues with people who are responsible in this area. They assure me they do not see any comfort or solace in that proposition.

In December 1969 average industrial earnings were £16.10 and in the same period the old age contributory pension was £8.50. Since then there has been an increase of 400 per cent in average industrial earnings. By how much has the old age pension been increased with this massive reformation in attitudes to the poor and the elderly, this new frontier in Christian conscience and the emphasis on human rights, particularly of the old, which we are alleged now to have breached? Although average industrial earnings increased by a total of 219 per cent since the early seventies, in the same period the old age contributory pension increased by 210 per cent—it actually fell—and the non-contributory old age pension increased by 226 per cent, or remained static.

If Members are interested in listening to any part of what I have to say, I would ask them to pay particular attention to this very important point. Members of this House, commentators and economists use the Consumer Price Index as the indicator of economic and social well-being, but that is unfair when dealing with the 400,000 people in the social welfare category. These people do not purchase most of the elements which make up the CPI. A food and shelter index would be more appropriate for them and would show a starker figure. In 1979 unemployment assistance constituted 45 per cent of average industrial earnings, while in 1970 the same benefit constituted 47 per cent of average industrial earnings. The old age contributory pension in 1970 represented 53 per cent of average industrial earnings and the figure today is 40 per cent; there has been a fall of 13 per cent. The old age non-contributory pension in 1970 was 23 per cent of average industrial earnings; today the figure is 21 per cent.

Can anyone stand up and pretend that we have any kind of major improvement in relation to the deprived and disadvantaged when these are the statistical facts? The truth is we cannot. When we take, on the one hand, the unchecked price increases which will be the issue of the day and the central issue in the next election and, on the other hand, the contraction in some cases and certainly the lack of any real improvement in the ratio of social welfare benefits to other economic indices, we see a clear picture emerging of a Government who are heedless of those who are not strongly represented and who are essentially concerned with looking after the stronger in our society. Even if that were economically sound, which it is not, it is a foolish approach if we genuinely want to pursue harmony and stability. Sooner or later the implications will break and there will be a growing militancy among people who are hard pressed and are increasingly taunted and provoked by a Government who give patronage to those at one end of the social spectrum and also by the consumer movement which shows such people that apparently a large section of what others enjoy is never to be theirs.

I do not believe any one Government or Minister has the answer to these questions, but it is in that fundamental context that social justice will be created. There is room for us all to give a great deal more and then the pleas of the Taoiseach, on his rare appearances, and of his Cabinet for more effort and input, more basic patriotism, would get a response. In terms of economic strategy this budget is failing. I say this with no sense of triumphalism or jubilation. It is very sad. The interests of the country are bigger than the interests of any political party; and many of us wished, and still wish, the Government to succeed in achieving targets for the sake of the people. Reading through the budget statement, one sees a clear attempt to stave off, to appease one side, to hold all ends against the middle and to play for time, whether it be time in which to decide on a general election or time needed to regroup and restrengthen one's relatively demoralised or divided position within a Government. Real leadership is needed, with cut and thrust and the ability to motivate and inspire people. People are waiting for such leadership and will respond if the measures proposed are seen to be about creating economic, industrial and social peace in the community.

The time will shortly come—many of us believe it is here already—when we must look again at the unquestioned and assumed definition of economic growth, which is apparently the clarion call of so much political thinking today. We must rethink our ideas about economic growth inherited from thinkers of the past and the infinite push towards increasing expenditure in many areas and towards increasing productivity, which has a very narrow definition at present related to a very narrow range of goods and services. It will be difficult and those who will seek a new definition of economic growth will base it not on a growth mentality but on an attitude to society which believes that stability is an important virtue, that economic growth sometimes breeds instability, breeds unnecessary waste, unnecessary competitiveness, unnecessary social injustic and unnecessary division. Those people who will talk in this way will run a risk. They will be accused of being halfhearted, of being soft in certain respects or of not being committed to job creation. I have never heard a Minister raise a question or express a doubt as to whether the kind of jobs that would be created were worthy of the people whom it was hoped to slot into those jobs. We must inject a great deal more of the qualitative approach than has been the case up to now. In reality a budgetary statement is one not of fiscal policy but of social policy, a statement which means much more than the figure at the bottom right hand corner and which means a good deal more in terms of the quality of life, of ensuring that everybody has some place in the sun and share in whatever is going.

I do not wish to end on a negative note. Consequently there are some options that I should like to put before the House. There are major challenges ahead but these challenges can be confronted and dealt with in a positive way not only by the Government but by everybody else in the House as well as by those outside it. We must not continue to proceed on the basis of divisions in society, on the basis of appeasing the strongest lobby. What about those who are not in a position to march outside the gates of Leinster House? Are we to jettison such people? If the record of the last decade in relation to statistical facts of social welfare payments as percentages of other economic indicators is any indication, the people to whom I refer have been jettisoned. While we do sufficient to contain them we have never asked such fundamental questions as why should a man who is going into retirement or why should somebody who is jobless be expected to live suddenly and dramatically on a mere fraction, a quarter or a third or perhaps up to a half, of the amount that everybody else needs to live on? Are not the obligations of the pensioners as great as those of anybody else? Those who say that the money is not available to do any better miss the point. The point is that there is a need for new thinking and for agreeing then on new policies arising out of that thinking. Those policies, if the Government have the courage to say so, mean that some will have less in terms of the share of growth than they have had in the past but that others will benefit disproportionately more than has been the case up to now. There are strong economic and social arguments for such policies but there is the more fundamental argument, the argument which relates to basic human rights and to the need for clear evidence of increasing concern about justice in the community.

If we are to work towards a stable and economic social environment we must do a good deal more than the accountancy exercises which budgets have become. Sooner or later some of the changes we must make will involve minimum disruption of ecological processes, maximum conservation of materials and energy, an economy of stop rather than of flow, a population in which recruitment equals loss and a social system that the individual can enjoy instead of feeling restricted by the first three conditions. The achievement of these policies may come about by any or all of the following operations which I suggest may be the kind that we must consider. The first is a control operation whereby environmental disruption is reduced as much as possible by technical means. The next is a freeze operation in which present trends are halted. These will include either a freeze or an attempted freeze in many areas of basic essentials. We must consider a systematic substitution by which the most dangerous components of these trends are replaced by technological substitutes the effect of which would be less deleterious in the short term but which in the long term would be increasingly effective. We need to consider systematic substitution whereby these technological substitutes are replaced by natural or self-regulating substitutes, those which employ without undue disturbance the normal processes of the ecosphere and which consequently are likely to be sustainable for long periods of time. We must consider the invention, promotion and application of alternative technologies which are energy and materials conservative and which because they are designed for a relatively closed economic community are likely to disrupt only minimally ecological processes. We are talking about what has become known as intermediate technology.

We must talk also about the decentralisation of policy and economy at all levels and the formation of communities small enough to be reasonably self regulating and self-supporting with education for such communities. Perhaps other changes are necessary too. But we need a different kind of society. If I were to sum up the title that I would like to see applied to the Government's economic programme it would be "A Better Way of Life", not merely the simple catchcry which I consider to be about to be open to question whether it should be redundant of economic growth at all costs. We are only one small part of a global process, of a global village that is shrinking all the time. Not only have we responsibilities to our own people but to people in other countries and to people anywhere who have a lot less than we have. The share of the western part of the northern hemisphere which we have been enjoying for so long has been achieved and is continuing to be achieved at the cost of enormous deprivation in other parts of the world. In that regard there is a challenge, too, and I am confident that if that challenge were projected properly our young people would be motivated into responding. I am confident that, as has been the case always, our people will work and will strive if they are given honest leadership and the kind of disciplined patriotic approach which is necessary to the management of our economy and, very importantly, of society. While there are many omissions so far as this budget is concerned, I wish the Government well in regard to it for the sake of all sections of the community.

Mr. B. Ahern

I welcome the opportunity of contributing to this debate. I regard a budget as being concerned totally with social and fiscal equity in regard to the running of the country. As I have remarked in regard to the previous two budgets, I fail to understand why at this point in time a budget should be so sacrosanct, so hidden and so secretive prior to budget day when one considers that in business nowadays there are discussions with every section and group involved prior to a budget being formulated. However, I was glad to note that this year there were more talks with the various interested parties, the Irish Congress of Trade Unions and the farming bodies, in an effort to formulate the best possible budget which would meet with greatest acceptance. It is the job of the Minister for Finance to achieve that balance.

In the times in which we live, in an open economy, over-dependent on energy, this can be regarded as a good budget. As the Minister for Finance said on budget day, the prudent management of public finances and improvement of the climate for economic development are normal priorities. This year because of the problems created by the oil crisis the burden to be borne by everyone is far greater. The Minister said also that a progressive economic policy could be implemented only through the collective commitment and action of all sections of the community and must be built on the firm foundation of a caring and sharing society.

It is generally accepted that the budget gave a lot to the under-privileged in our society, taking from those who can contribute most. I agree with the Minister for Finance that it was a realistic budget, recognising that a significant start must be made in resolving the problems confronting us. It makes a serious effort to come to grips with the inadequacies, which have long been accepted, of our present tax structure because it did not keep pace with inflation.

The projected reduction in the level of Government borrowings gives testimony to the Government's intention to restore order to the public sector finances. It would have been nice if in 1980 the Government had continued to stimulate the economy, which in turn would have assisted industry and the employment targets. However, circumstances obtaining did not so allow because the Government knew that the forecasts for this year were of a low rate of growth, along with an ailing world trade environment and our continuously rising labour force of 1 per cent per annum, one of the most rapid in Europe. This year—as in other European countries and indeed generally throughout the world—this continued stimulation of the economy could not be practised because of the level of public sector debt and the balance of payments deficit which amounted last year to approximately £800 million.

This budget will be remembered most for the changes it effected in the taxation structure at a juncture at which people rightly felt there was an unfair burden on one section of the community as against another. This was accentuated by the rising rate of inflation and the fact that the taxation bands were not widened in line with the substantial salary increases granted and those implemented under the terms of the various national wage agreements since 1970. These tax changes were welcomed generally by the PAYE sector, particularly the introduction of the income-splitting for married couples, giving all married couples the benefit of double the personal allowance applicable to single persons. Indeed such revision went beyond what the Supreme Court decision stipulated. Also the additional Schedule E allowance afforded relief to many taxpayers. Also the revised exemption limits will remove many thousands of people from the tax net. For single people these allowances will amount now to £1,700 and, for married couples, £3,400. The relevant table in the Principal Features of Budget goes on to give the allowances for persons aged 65 or over and aged 75 or over. In respect of single and widowed persons aged 75 years or over, now to receive an allowance of £2,500, and married couples aged 75 years or over, now to receive an allowance of £5,000 I am not sure whether in the latter case they will receive that allowance whether one spouse only is over 75 years or whether both must have exceeded that age.

While it is always unpalatable to anybody to have to pay more tax it is difficult to complain too much about the rise in indirect taxation. From my reading of a number of business journals it seems generally accepted that these indirect taxes are accepted as discretionary expenditure; certainly they are for the private individual and people in the business world can cut back also on their expenditure. Indeed substantial savings in companies' transport/energy bills could be effected if their methods of transport were given serious consideration by the transport managers concerned. Almost all of our energy is imported which means that any overall cut-back must assist our economy.

The indirect taxation was necessary because of our balance of payments situation and the constraints on Government borrowing. The tax concessions given in the budget had to be financed by tax increases in other areas. For over two decades now the practice has been to over-borrow, a practice which must be rectified. Therefore it is only right that benefits given in one area be recouped from discretionary taxes. This is the fairest way to do it. The regressive impact of indirect taxation on the most vulnerable section of the community—the social welfare recipients, of which there are some 400,000 in the State—will have been substantially offset by the increases granted in the social welfare allowances. This was a new dimension to the budget in that it counteracted something about to take place rather than perhaps rectifying it later.

Probably in the past few years I have been over-critical of the farming community and their complaints to the effect that they are not against paying their fair share of taxation yet they seemed almost to reject any system suggested. I would be more sympathetic to the farmers this year because their tax burden is rising while their real incomes fall. It would appear from activities in Brussels and generally in the European Parliament that there will be a cut-back in agriculture which is bound to affect our farmers to some extent.

With regard to our balance of payments and Government finances generally our problem for a number of years has been the growing gap between expenditure and tax revenue. Last year that gap amounted to something of the order of £1,000 million. Over half of our borrowing is simply to correct the imbalance between expenditure on current items and current taxation. Exchequer borrowing must be controlled. Last year it was 13.7 per cent of our gross national product, whereas in other countries it is 3 per cent or 4 per cent only. This year we hope the figure will be reduced to 10.4 per cent. However it must be obvious to everybody that our Exchequer borrowing is far too high and that that is not something that can be reduced in one fell swoop; rather it must be achieved on a gradual basis. The serious constraints placed on the Government by the balance of payments and the 1979 deficit of £800 million on current account arise from the adverse variances of imports over exports. Last year—if one looks at the volume rather than the financial figures—one will see that the export volume increased by 14 per cent as against 5 per cent for imports.

I appreciate that all items required by consumers cannot be produced within the country, but the "Buy Irish" campaign never got off the ground fully. We hear people crying about unemployment, about industries being closed down, some of them old firms, but many such people buy imported products in preference to the home-made article, thus contributing to unemployment here. If people see an imported article 10p cheaper than the home-produced commodity they will buy it in preference and still cry about the unemployment of one of their family or their friends who has lost a job in an industry depending on support for home-produced articles.

As well, a number of Irish companies have cut down on their work force and are bringing in some of the articles they sell from their parent bodies in the UK or elsewhere and label these items as being assembled here. I have heard products being brought in. The importers added nothing to them but the laces and then labelled them as being Irish manufactured. A number of companies who manufacture car batteries have gone on a three-day week and at the same time they are importing large numbers of batteries. I should be glad to see any concessions or reliefs such people get removed because people who make their production lines easier by importing articles deserve to be punished severely. When a Deputy spoke about this in the House recently it was denied that such things were happening but I have heard it is happening in a number of industries.

If consumers here are in earnest about maintaining employment here they must make every effort to buy Irish goods. Even if the price of the Irish manufactured article were 10 per cent above that of the imported article, the purchase of the Irish article would mean that much benefit to employment and therefore to the Irish economy. Therefore we would still be buying the Irish article cheaper.

Our balance of payments position last year was seriously affected by a drop in agricultural exports on the one hand and the sharp 60 per cent increase in the price of imported energy. We have been told that this year the import volume will fall by about 2½ per cent and that our volume of exports will rise by 7 per cent. A cut-back in Government borrowing is the most satisfactory way to control the balance of payments. It is estimated that for every £10 million cut-back in Government spending the balance of payments deficit is reduced by £80 million. We know the Government have tried to curb current State expenditure. The Estimates indicate an increase of only 18 per cent in current expenditure which is generally regarded as a good achievement.

I believe that it will be very hard to keep the demand for increases in public sector pay this year at 5 per cent. Having been associated for some years with this sector I know it would be extremely difficult to keep increases in non-pay items in the public sector below 5 per cent this year. For instance, the health services depend a lot on imported items and we have no control over price increases on these items. I refer to items like X-ray film which can go up anything from 70 per cent to 80 per cent. The price of drugs can sky-rocket. Therefore it would be impossible to maintain control over such items because it would involve a cut-back in services.

Another element in this respect is that a large proportion of the money paid out otherwise than in wages and salaries goes to contractors whose estimates are based on how much they can settle pay demands for. Such contractors may well not be able to cut their settlements to 5 per cent. All these factors also apply to private industry.

The demands for social welfare and other such services are unending and so is the demand on the taxpayers. The Minister was able this year to give increased benefits to a number of people but all these things have to be paid for by the taxpayer. Therefore, when demands are made for additional services and when they are turned down; people must understand that these things must be paid for from tax revenue.

Taxes must be collected fairly from the entire work force. General taxation here runs at about 34 per cent of gross income, much less than in most European countries, but the problem here is that the tax was not spread equitably, the main burden falling on the PAYE people, Demands are now being made on others. We may refer to farmers, but I am glad to see that last year an all-out attack was made on tax dodgers. In the budget statement we read that about 6,000 such people were caught last year. It is staggering to think that so many people are still managing to dodge the tax net.

I submit that the only way taxation will be spread fairly is through direct taxation completely. I realise there are great administrative problems but I hope such a system can be devised so that dodgers will be eliminated. There are far too many people in Dublin and throughout the country working up to 60 hours a week tax free while collecting social welfare benefits. Nobody squeals on them. There are thousands of such people around the city of Dublin. The Revenue Commissioners have traced some of them but many work from their homes. Any money spent on bringing these people to heel is worth while. I presume the commission will tackle this problem. I wish them luck.

As the Minister said, any tax system should provide that each taxpayer pays according to his means on a common basis with everybody else. The more wealthy should pay in proportion to their salary. A good feature of our tax system is the various reliefs provided for the family by way of children's allowances and so on. I am glad the Minister did not just follow the decision of the Supreme Court. That decision left far too many loopholes, as appears to be the case with most court decisions. The courts make a decision under our Constitution but usually there is more chaos after the decision is made. Now all married couples have been given the benefit of double the single personal allowance. Reform in this area was one of the major demands of the PAYE sector.

The provision with regard to Schedule E tax is also to be welcomed as is the changing of the tax bands. When one takes account of the new rates of tax, mortgage relief and so on, a married man would have to earn approximately £15,000 before being liable for income tax at the rate of 45 per cent. This was a major concession in the budget. The Minister assisted about two-thirds of taxpayers by his action with regard to tax and those who have been helped should give a commitment to help the Government. The main demands of the PAYE sector have been met and this has been accepted by the majority of taxpayers. Many people doubted that the Minister could take such decisive action in a year when the economy was in certain difficulties. That action was taken while reducing Government borrowing from 13½ per cent last year to 10.4 per cent. A total of £140 million has been given by way of tax allowances and this has been a tremendous boost.

By their policy with regard to social welfare the Government have shown their care and concern for the most vulnerable in our society. The Government are asking the people to help those less well off. Some people appear to think that their taxes are spent solely on sending Ministers to Brussels or elsewhere. They forget that their own parents are probably receiving non-contributory pensions, that their gas bills are subsidised, that public transport is subsidised and that roads are maintained. They forget the many areas where money is spent.

In addition to the 6 per cent granted last October in respect of social welfare benefits, there have been increases in the allowances to old age pensioners, to widows, deserted wives and incapacitated persons. There has been an increase of £8.55 per week in the maximum old age contributory pension for a married couple over 65 years. This was a massive increase for a small country like Ireland. We are an open economy and many price increases are outside our control. The Government have done much to help the needy and it is nonsense for people to say that they have ignored the poor and the lower income groups. The increases granted in respect of short-term unemployment benefit and assistance, disability allowances, maternity allowances and supplementary welfare allowances are to be welcomed. This will help to maintain the standard of living of this vulnerable section. The Opposition said that the Government were about to abolish children's allowances but they were increased in the budget. The Government have devised a more equitable way to help those who need help.

Because of the economic situation the Government have tried to keep public sector finances to a minimum. They have tried to ensure that money is spent in a worthwhile way. The Public Capital Programme figure of £1,154 million is an increase of 15 per cent over last year. This was done at a time of financial constraint and it reflects the policy of the Government that investment for future growth should continue to have a high priority. This allocation accounts for about half of the total national investment and it influences substantially investment by the private sector. Obviously if the Government do not put money into this area the private sector will not do so. The Government have stressed the importance of giving priority in the allocation of resources to investments that will lead to expansion of the productive capacity of the economy. This will help employment and will maintain the excellent record of the Government in this area in the past few years. In Europe Ireland has the highest proportion of young people in the population and it is essential that jobs be available for them. The Public Capital Programme is one of the main ways the Government can do this. They give grants to the IDA and other semi-State bodies to encourage technological industries to come to Ireland. This process will increase our exports and will keep our employment figure as high as possible.

The second priority in the Public Capital Programme is the development of national infrastructure such as telecommunications, energy and roads, and 30 per cent of that programme this year has gone to those developments. The Public Capital Programme gives 33 per cent to infrastructural development for projects and 42 per cent goes for improving the productive capacity of the economy.

We find that £182 million is given to housing. A large proportion of this is for the Dublin area. The standard of houses being built has vastly improved from what it was about seven years ago. Some people talk about a housing emergency. It is an emergency for even one person who is on the housing list but those things can be taken out of context. Any person with children nowadays is allowed on the housing list whereas some years ago a person had to have a certain number of children and had to fulfil certain conditions to get on the housing list.

There is £97.5 million put into local authority loans this year. This is an increase of £10,250,000 on the 1979 figure. There will be 6,000 houses completed this year. This provision also provides for an increase in the local authority loans from £9,000 to £12,000. Those loans remained static at £4,500 for many years. Two years ago this went up to £9,000 and has now gone up to £12,000. I know it is very difficult to buy a house in Dublin because of the very high cost and this increase in the loan should be of some help to people trying to buy their own houses.

The amount given to education this year to assist primary schools is £49 million. This includes the National Institute for Higher Education complex in Ballymun. There is an increase also given for residential homes and special schools for people who require special type education. The health grant of £28 million will ensure that the very ambitious programme of hospital buildings and extensions which was started by the Taoiseach when he was Minister for Health will now continue. Many improvements in hospital buildings have been shelved over the years because of the lack of finance in former Public Capital Programmes.

While the amount given to housing for young people is very welcome I feel that because of the number of people between 25 years and 30 years who require housing and the number of people who over the next ten years will enter this age group and will also require housing, the State will need to continue helping those people. I know that the State has not got unlimited resources and that people should help themselves if possible. A very welcome decision was made in the budget to raise the maximum limit for saving certificates and index linked saving, which affords some protection to small savers, with inflation rising every year. Many young people would like to be able to save but their efforts are being frustrated every year by price rises in excess of the interest paid on their savings. If their savings could be index linked or if the State could match their savings pound for pound it would be cheaper for the Government in the long run than trying to solve the numerous social problems which arise from inadequate housing and families living with each other, becoming depressed and feeling they have no future. I believe there is some system in Australia where the State match the savings of private individuals. Some people say that this would cost a fortune but I do not believe it would.

At the moment a local authority house costs between £30,000 and £40,000. The new local authority houses being built at City Quay will cost the local authority £40,000 each. If ten of the people who will get those houses got a grant of £4,000 each and saved an equivalent amount the number going on to the local authority list would drop. A total of £43 million has been given for housing this year between Dublin city and county. I do not know what the people who say there is an emergency now would call the conditions which existed in the fifties and sixties. The standard of local authority houses now is vastly improved from what it was some years ago. There is no point in increasing the number of local authority houses built if shoddy houses are built. All houses built should be built to decent specifications.

There have been many benefits given in the budget to assist old people. I have had experience of old people having difficulty filling up tax forms. Many of them will now be taken out of the tax net with a special allowance of £4,000 for a married couple over 65 and £5,000 for a married couple over 75. The increased allowance given for taking care of an incapacitated person and the allowance for a one parent family are very welcome as well as the doubling of the blind person's allowance. This is all part of the caring policy of the Government towards the less well off people in our community.

This budget is a good one. The borrowing requirement has fallen. I hope that the community in general will try to help the Government to overcome our problems rather than seek compensation for the price increases and the rise in indirect taxation. The previous speaker missed the point that increased taxation was necessary so that the various benefits can be given to social welfare recipients. The tax benefits will also ensure that when a worker gets his pay packet he will get the maximum amount possible and it is then at his discretion how he spends it. If all workers try to get back the increases in prices by increased wages it is not members of the Government but the taxpayers in general who will have to pay the bill. If we go on every year increasing our borrowing and lowering our national reserves we will become a nation in which inflation has gone completely out of control. It is not a question of trying to get at the Government, negotiating a national wage agreement and bringing about an increased inflation rate, which will achieve nothing. I know the Irish Congress of Trade Unions realise this. People will have to accept that we must keep a tight grip on our incomes policy. The tax incentives given in the budget will be seen as an incentive by workers who will be ready to accept that there will be a more equitable tax system. Many ambiguities are being eliminated from the tax system and I hope the tax commission will eliminate even further ambiguities when they publish their interim report.

Efforts should be made to control energy costs. The benefits given in this budget should be appreciated. People have pointed out that there seems to be a contradiction here: the Government say they are concerned about the energy bill while, at the same time, they increase the VAT on bicycles. The Minister might look at this and encourage more people to cycle.

Although we might not like to admit it, this country is influenced by what happens in the rest of the world. We are part of the EEC. There is not always a national commitment to buy Irish goods. At present there seems to be a great many commodities from other countries which are affecting home trade. For example, there is a great deal of cheap clothing on sale in Dublin shops. This has a detrimental effect on our clothing and textile industries. While we have to comply with EEC regulations, we should not encourage the importation of goods from countries like Taiwan and Hong Kong. The people should accept that to buy Irish means providing employment for our young people, maintaining a certain standard of living and ensuring that we have a sound economy.

A certain section of the community enjoy a very high standard of living. Many families have two cars, many have summer and winter continental holidays and many people can afford to visit the pubs three and four times a week while a small section of the community are finding it very hard to make ends meet. If we are to have control over our own destiny we must all play our part.

Mr. Corish

This budget has been debated at some length and I do not propose to delay the House because I would be only repeating what has been said by Opposition Deputies. One gets the impression from Fianna Fáil speeches that when the Taoiseach and the Minister for Finance changed there was a completely new regime, that there was a different party. We heard criticisms from members of the Fianna Fáil front bench about correcting the errors of the past two-and-a-half years. They are trying to give the impression that Fianna Fáil were not in office during that period. There appears to be an absolute rejection of the former Minister for Finance and the Minister for Economic Planning and Development, Deputy O'Donoghue. The message coming across from present Ministers seems to be that the Minister for Energy, Deputy Colley, and Deputy O'Donoghue made a "bags" of the economy over the last two-and-a-half years. These people, especially Deputy O'Donoghue, were regarded as the architects of the Fianna Fáil victory in the 1977 general election. That is an internal matter for the Fianna Fáil Party and it is not for me to comment on it further.

We could regard this budget and the Finance Bill as the instruments which determine the social and economic plan for this country for the next 12 months. This budget has been described by Members of the Government front bench as restoring order to the economy. Who created the disorder? Some time ago when budget proposals were published one could have said: "This is the economic and social plan for the next 12 months". At present it is appreciated that we are not masters of our fate. We are members of the EEC and are governed by the rules of the EEC. We are influenced by world depression, by an upsurge in the world economy and, above all, our economy must be influenced by the price of oil which has reached astronomical heights.

On flicking through the Minister's speech when he introduced the budget, it appeared that the economic and social needs of the people were being met to some extent. Some of us suggested that this was an election budget but if it was an election budget it is in favour of the Opposition parties and not the Government. From the Minister's budget speech it appeared that the State's finances were reasonably sound but it did not take long for the public to realise the implications of the proposals contained in the budget. The haves got more than the have nots. I admit that the social welfare and income tax concessions are generous but other features in the budget were initially ignored as people usually read the papers to look for income tax reliefs, the price of the pint and so on. However, the capital allocations are of vital importance to the economic and social welfare of the country. It is now clear that the capital allocations are inadequate in relation to education, health, roads and hospitals although there have not been major increases in respect of other capital allocations. In relation to hospitals, roads and education there has been a real reduction in terms of the 1979 allocations.

The Government appear to be following the Tory Thatcher policy of cutting down in a very ruthless manner on capital expenditure in order to reduce inflation. Cuts in our capital allocations are also very drastic and the Government do not seem to realise the implications of this in relation to a reduction in employment and a diminution of services. In relation to unemployment I give credit to Fianna Fáil for the creation of a certain number of jobs but there were very ominous signs in the last publication of the unemployment figures which showed that unemployment was at 87,300, an increase of 800 on the week before. Whilst the Government are concerned about income tax, social welfare and so on, they must also be concerned with the retention of employment and the creation of more jobs not alone in the public sector but in the private sector.

The Minister for Education interjected today to say that there had been no cut-back in education. That may be so as far as current expenditure is concerned. The Minister must meet salary and wage increases and of course the Book of Estimates will show an increase. As far as the capital allocation is concerned there is a definite reduction. I wonder if the Minister for Education and the Government appreciate the damage they are doing and why it is necessary to allocate much more money in relation to building new schools and so on. New schools are urgently needed throughout the country and we all know of schools that are over a hundred years old. I had a letter recently in relation to Murrintown School in County Wexford which is typical of many schools throughout the country. These people had hoped for an extension to their small school early this year, but from the information available no extension is forthcoming. An extract of this letter is as follows:

The temporary classroom is only 10 ft by 16 ft. Imagine that with 24 mucky children crammed into it!And the condensation on top of that!A teacher from another school who sends her child to this school said at last week's meeting that under no circumstances would she teach under such conditions.

We have no hard surface games court. We have no general purpose room. We have no physical education store so hurleys etc. have to be stored in classrooms. The sewerage system is continuously breaking down through overloading. At times seepage from it comes up through the floor of toilet area. The girls' cloakroom is being used for temporary classroom so there is no girls' cloakroom.

And all this is a school with 98 kids. And while we have 98 kids this year, last year we had 83, the year before 73, the year before 65, and next year we will have almost enough for 4 teachers.

That is not untypical of the conditions of schools throughout the country. It is not good enough in this day and age to have our boys and girls receive their education in conditions such as have been described in this letter.

The Minister for Education said there were no cut-backs in education as far as the capital programme is concerned but there is a cut-back when one takes into account an inflation rate of about 20 per cent. The capital allocation for education in 1979 was £53 million. In 1980 it has been reduced by £4 million to £49 million. I am sure the Minister has fought his corner in the Cabinet but I would ask the Taoiseach and the Minister for Finance to reconsider that allocation as it is a false economy that will rebound on the community in a very short time. We badly need these extensions and new schools.

While the capital allocation for health shows a small increase, from £27½ million in 1979 to £28 million in 1980 the inflation rate of 20 per cent, which is generally accepted, will mean a real reduction of about one-fifth of the 1979 allocation. In relation to employment many contractors and workers were looking forward to building hospitals throughout the country. A press report the other day said that the proposal to commence building Castlebar Hospital was not now being proceeded with because there was not enough money. What has happened to the hospital plan which I introduced five or six years ago, a plan that was criticised by many in the Fianna Fáil party? That plan was implemented to some extent but many more hospitals are needed. These hospitals have been approved but there has been no progress since. The health allocation should be increased so as to provide proper facilities for people who have to go to hospital, to maintain employment and to create more employment.

There has been a very small increase in the capital allocations for water supply and sewerage facilities. In 1979 the allocation was £40 million and in 1980 it is £44 million. That is an increase of 10 per cent but with inflation of 20 per cent it will be a real reduction of 10 per cent.

We have the same situation in relation to roads and every public and local representative is crying out for money to repair the damage done to the roads during the last two or three bad winters. They were bad winters but the Government have a responsibility to the public, especially the motoring public, and they should ensure that sufficient money is provided to put the roads into a reasonable state of repair. Local authorities cannot engage in road improvement or construction. They must devote all the moneys to road maintenance. This is a very unwise policy and it will rebound on the ratepayers to some extent and certainly on the Government who, if they let the situation with regard to roads get out of hand, will have to pay a very hefty bill indeed.

Therefore, these three Departments, of Education, Health and the Environment, have suffered big losses in capital moneys in regard to water, sewerage and roads. This must mean a cut-back in employment because these are labour intensive sectors of the economy and the water and sewerage situation will mean a slow down in the provision of houses that are so badly needed in the town and country areas. It will also have an effect on industrial development. We have had complaints from those in industry, particularly in recent months, about the condition of the roads and the effects this is having on their businesses. Not alone should there be an allocation for roads to keep up with last year but there must be a massive injection of money. All of us recognise that the roads we have at present were never meant for modern traffic. There has been an increase in capital for industry but again not enough to keep pace with last year when inflation is taken into account. There is an increase of about 7 per cent and for 1980 that will mean £288 million. Last year it was £269 million and therefore there is an increase of £19 million or 7.5 per cent. To keep up with inflation more moneys should be provided by way of capital for industry.

Regarding industry, I was very interested in what was said by the last speaker, Deputy Ahern, when he talked about the "Buy Irish" campaign. I have seen many "Buy Irish" campaigns in my lifetime and I am sure the Leas-Cheann Comhairle has as well, and no matter under what regime, they flopped abysmally. The "Buy Irish" campaign task has been assigned to the Minister of State at the Department of Industry, Commerce and Tourism, Deputy R. Burke. I would not be too critical of him, but he came to my home town in Wexford, as I am sure he visited other towns in Ireland, to get the "Buy Irish" campaign off the ground. He gave a good, logical speech and a few people asked questions but within half an hour the whole thing was wrapped up and nothing else happened. Whilst the Minister of State has a limited time, as any Minister has, and while he may do a certain amount to promote this campaign, there is no follow-up. One that occasion I asked the Minister of State what we should do now and whether we should form a committee to promote this campaign in our own area. He was not too clear as to what we should and could do. If we are in earnest at all about a "Buy Irish" campaign we have to have it spearheaded through some section of the civil service and local committees of businessmen, trade unionists and so on should be engaged in that campaign. As Deputy Ahern said, it is an absolute scandal that shops, particularly in Dublin, are crammed with foreign made goods, footwear, clothing and many other things. There is nothing much that we can do about that by way of prevention but at least we could try to induce our own people to buy Irish under the "Guaranteed Irish" system which is a very good system indeed. Merely to make a few speeches about buying Irish is not sufficient. There has to be a follow-up by those in the Minister's office to the organisation and co-operation of the general public.

I have mentioned a few items in regard to capital allocation. In the overall programme there is no real improvement either. The total Public Capital Programme stood at £1,001 million in 1979 and this year the amount provided is £1,154 million, an increase of £153 million or 15 per cent. Anybody who likes may challenge it. We have to take into consideration the 20 per cent inflation which may be even higher and I would not say that it will be less during the year. There will be fewer jobs and less growth. This is a big swing away from the policy of Fianna Fáil who when they came back to office rightly put the emphasis on employment, but that does not appear to be so important now. If it were important they would have provided much more money or at least for a reasonable increase in real terms as far as the total Public Capital Programme is concerned.

As I have said, usually on the day of the budget or the day after there is not much interest in the capital budget. The current budget is of primary concern and the proposals in the current budget are given wide publicity in the newspapers and on radio and television. People are anxious to know what they have to give or what they are to get. The situation in which we find ourselves as a result of the proposals in the current budget is to the maximum extent due to the Fianna Fáil attitude and promises. They are now nearly three years in office and they have done a great disservice not alone to themselves but to the public also in the promises they made in their manifesto and in their subsequent behaviour after their re-election to Government in 1977. Before the last general election and for some time afterwards the Fianna Fáil Party raised the expectations of all sections of the community. They sold the idea that everything could be got and got for nothing. There was no question in the manifesto of people having to pay for the various things they had been promised by Fianna Fáil. In their first budget in 1978 they reduced the taxation band. They increased the budget deficit. It was a policy of economic madness. They abolished car tax virtually and they abolished rates. If the Minister for the Environment now had the Road Fund at his disposal would he not be a happier man than he is at present when he has not sufficient moneys to give to local authorities in order to maintain the roads?

I can never understand the attitude of the Fianna Fáil Party who in private conversation—maybe not publicly— would describe themselves as socialists and imply that they are far better socialists than any member of my party. I can never understand why, unless for some ulterior motive, they abolished the wealth tax. They gave various reasons but these did not hold water. I cannot say exactly what the wealth tax would give in present money terms but it would be about £40 million or £50 million and when one relates that to the total amount of Government expenditure this year that would be merely a bagatelle. However, it is £30 million, £40 million or £50 million which could be given to deserving sections of the community.

I saw nothing wrong with the wealth tax. My party advocated it prior to the election of 1973, advocated it successfully within the Government of 1973-77 and still maintain that there is a moral justification for the imposition of it. It assures merely that those who prospered here in Ireland—and a fair number of people did so—with Government moneys and with the co-operation of Irish workers and amassed quite an amount of money should give back some of the moneys so made to deserving people in the community. The wealth tax is not peculiar to Ireland. It is true that Britain has no wealth tax but seven or eight western European countries have and there is not much criticism of it.

I have been speaking about the consequences of the Fianna Fáil policy being massive cuts in capital expenditure. As a Government, they now must resort to indirect taxation. On one occasion the present Taoiseach—I forget in what capacity he appeared—said on television, without any strings attached or any qualification, that indirect taxation was felt more by the poor. In this budget his Minister for Finance proposes to collect £248 million extra in indirect taxes. Apart from indirect taxation making people pay more, it also increases the rate of inflation by 5 per cent and at a time when it is running at 17 to 18 per cent and will be 20 per cent or more as the year goes on.

People are under the impression that more was given out in this budget than was taken back. This can be readily denied. The budget took in more by way of taxes than it gave out by way of PAYE relief and social welfare. As far as PAYE is concerned, £140 million was conceded and in social welfare the Government bill was £95 million, making a total of £235 million. However, indirect taxation came to £248 million and direct taxes to £44 million, so taxation increased by £57 million. That extra £57 million will be borne by a certain deprived section of the community. The reliefs given are less than the increases in taxation and are biased against the poor section of the community. I say that very deliberately. Those on social welfare got far less relief than those at work, and for those on PAYE the more they had the more they got back. One has only to look to the blue booklet issued by the Minister for Finance for confirmation that this is the case.

There was a case for relief as far as income tax was concerned. We are all aware of the peaceful demonstrations by the trade union movement calling on the Government to give tax concessions in this budget of 1980. I suspect, however, that a few of the people who marched in that parade should have been giving more, not looking for more. The best example regarding the income tax concessions would be in respect of a man with a wife not working and with two children. That person earning £3,000 per annum saves £2 per week. The man on £5,000 saves £4 per week. The man on £6,000 saves £4 per week. The man on £10,000 saves £14 per week. The man with £25,000 saves £44 per week and the man with £30,000 saves £44 per week. I do not know if anyone believes that the man with £30,000 a year should make a profit out of all this of £44 per week. This was a concession right across the board, but the Revenue Commissioners and the Minister for Finance should have done a little more thinking to ensure that the man at the bottom got a litthe more and the man at the top somewhat less. The man on £25,000 per annum—and, with inflation, there are such in this country—who saved £44 per week may be brilliant and be contributing greatly to the economy, whether in industry or in some administrative job, but was it intended that he should save £44 per week and the man with a wife and two children on £3,000 per annum should get £2 per week? The income tax concessions were not ungenerous for those in the upper bracket.

I mention a point raised by, I think, Deputy Ahern—tax avoidance. It appears from newspaper reports that the Revenue Commissioners are making intense efforts to ensure that there will be no tax avoidance but they will have to double and treble their efforts, because unless something is done there will be an amount of tax avoidance in this country for some time to come.

In regard to social welfare, it is very impressive to hear from the Minister for Finance that there will be a 25 per cent increase for long term recipients of social insurance or social assistance and for short term recipients there is a 20 per cent increase. The percentage is large but the amount on which the increase is based is pretty small and according to all forecasts will be eroded within the next 12 months. The short term increase of 20 per cent will certainly be eroded and the 25 per cent on long term will also be eaten away by inflation, which is bound to increase over the next 12 months.

In comparing the amount given in respect of social welfare and the concessions given as far as income tax is concerned, I take the example of a widow with a non-contributory pension supporting two children. She will get an increase from 1 April next of £4.20 and the increase for her two children will be £2.80, so the total increase will be £7 per week—not an inconsiderable sum, you will say, but that only gives this woman a total of £34.80 per week and, having regard to the various prices which must be paid for food, clothing and other necessities of life for a family, £34.80 is not a great lot of money. The widow with two children will after 1 April have £34.80 but the man earning £30,000 per year will get an increase of £44. Let no one tell me there is equity in that approach towards those who are unfortunate enough to be sick or to be widows with dependent children. As regards term allowances, a man, wife and two children will get an increase of £7.60 per week. A sick man with one or two children will get £7.60. His total pay will be £45.60 but the person on £30,000 will get £43 per week, only £2 less. As far as the £30,000 is concerned, that is in respect of a man whose wife is working and who has two children.

As regards the old reliables, the glass of spirits has been increased by 16p, a pint of beer by 6p, cigarettes by 10p and a gallon of petrol by 20p. One wonders whether various Ministers for Finance want people to stop smoking or get more money. It is not too clear. I have no views to push on that subject but those who drink and those who smoke have been dealt a severe blow. They always seem to buy—not necessarily afford—their usual quantity of spirits or beer and smoke their usual amount of cigarettes. The increase on petrol has been a heavy blow to the motor car industry which gives valuable employment. Recent indications are that the bottom has fallen out of the industry to the detriment of many people.

Until I went home on the weekend after the budget I did not appreciate how important bottled gas was to the people. The imposition of 70p per cylinder was a very big increase and not justified. We have not finished with the effects of the budget. While these indirect taxes took effect almost immediately, people still have to face the certainty of having to pay a rate of 25 per cent VAT while at present they are paying 20 per cent. There was also an increase in car tax. One wonders when Fianna Fáil will revert to the old system of taxation on motor cars. The effect of these increases on tourism has been mentioned by many Deputies. The tax on petrol is reputed to be one of the highest in western Europe. These items because of their relative cheapness induced people—perhaps they were not the determining factor—to come to Ireland. But they said to themselves that drink, cigarettes and petrol would be a little cheaper. Ireland is not as attractive now as it was prior to 27 February so far as tourists are concerned. However, I am sure neither my plans nor those of anybody else will change the proposals the Minister for Finance has made in respect of these items.

What happened as far as Fianna Fáil general policy is concerned is still a mystery. Whether it was personal antagonism or not is not my business. It appears, with the virtual sackings of Deputies Colley and O'Donoghue, that the course on which Fianna Fáil had embarked in 1977 was the wrong one and that these were the two scapegoats. For the good of the country I hope this budget succeeds. If there is not rethinking on capital allocations, social welfare benefits and social assistance benefits, the country will be in a very sorry state.

When I was Minister for Social Welfare we introduced a system whereby an increase was given in October. That was carried on by the new Taoiseach who was the former Minister for Health and Minister for Social Welfare. It will have to be a little more than what is given in the budget. The type of person I described is desperate and it will be virtually the poorhouse for such people if the Government do not come to their assistance in October with a respectable increase.

Mr. Fox

The aim of this budget must be to be as fair as is possible to contributors and recipients. In other words, those most able to pay should also contribute the most towards the budget. Those most in need should receive the most. The method of taxation must be seen to be fair to all and as far as is humanly possible must be implemented in a fair manner. The only apparent exception in the budget is the resource tax on farmers. It is the only tax that does not take into account the ability to pay or the income of the person concerned. We have been assured by the Taoiseach and the Minister for Finance that this is a temporary measure. Let us hope that it is because any taxation that puts a brake on production has to be in the long term counter-productive to the community as a whole. I welcome the assurance that it is a temporary measure.

The business of farming is the only one, within the laws of economics, that is subject to the law of diminishing returns. No other business is subject to this law. That means that, over a certain optimum level, money and effort put into farming gives a decreasing return for such effort and investment. For example, the more fertilisers one puts on a field over a certain level the less return one gets from it. It is therefore evident that this special business must be treated in a special way. Farmers could claim special consideration because of this objective fact. The treatment they are getting must be rectified as soon as possible.

This position is nowhere more evident than my own constituency of North County Dublin. The hazards of the business are aggravated to a large extent by anomalies that exist within EEC countries. I refer to the cheap energy available to Dutch glass house producers in comparison with the high energy input required by North Dublin glass house producers. The natural gasfields in North Holland are capable of giving to the glass-house industry in Holland very cheap sources of energy which puts them in an unwarranted advantageous position in relation to North County Dublin glass house producers. We have proved that, if we get a fair opportunity, in most cases we are as good as the rest. Our glass house industry has been able to prove that time and time again. When conditions were favourable we were able to produce with the best in the world and export all over Europe. At times North County Dublin flowers were sold in Holland. I hope that equality of treatment in this industry will return as soon as possible.

Some of the budget benefits to the farming community are very progressive and should be recognised as such. The farming community must remember that the benefits available to PAYE workers are also available to the farmer making income tax returns to the inspector of taxes. I refer to income splitting. A married farmer would want to be on a considerable income before he would pay a substantial amount of tax because of this progressive aspect of the budget. This aspect has got to be recognised by the farming organisations as a step in the right direction in budgetary financing in relation to farmers.

This feature must also be recognised and utilised by our fishermen. They must take advantage of it, and they must be seen to take advantage of it. Very often they do not have access to sophisticated methods of book-keeping or to the type of accountant who can tell them what they are entitled to within the law in relation to budgetary benefits. There is an on the fishery organisations to keep the deck-hands and the skippers informed that they are entitled to this type of consideration. Certain parts of fishermen's taxation are totally unjust. Very often they are taxed week by week. One week they might have an extremely heavy landing and consequently a very high income, and they find themselves taxed as if that were their income every week. Consideration should be given to evening out the taxation system for fishermen. Their tax should be assessed over a period of, say, three months, rather than on a week to week basis as happens at the moment. This is a unique method of livelihood. The hazards, the long hours and the dedication involved are not involved in any other means of livelihood.

The opportunities fishermen have now have arisen only over the past decade or so. They have demonstrated very positively that they are capable of taking advantage of the grants we got from the EEC, and of the educational facilities provided under various Fianna Fáil administrations. They have shown very positively that they are capable of handling the most sophisticated and modern equipment and utilising it to the best possible advantage. The thinking behind the educational facilities laid on for fishermen has also permeated into other areas of our economy. I refer specifically to the regional technological colleges set up some years ago by our present Taoiseach when he was Minister for Finance. At the time they were said to be white elephants. It was said they would not be needed, but we are beginning to reap the benefit of this specialist technological education in the industries we are attracting from America principally and from Japan.

The type of person being turned out by these colleges is capable of taking advantage of the opportunities arising from this very advanced technology. In fact, we are way ahead of many countries in Europe in the attitudes we have and the abilities we are demonstrating in this modern micro-processor technology. We are gearing ourselves progressively to take more advantage of this as days go by. The educational facilities laid on by the regional colleges are an essential part of this progress. There are unique opportunities to give our youth an outlet for their natural talents and abilities, and for their desire to increase their standard of living. They are also there to create new skills and give expression to the skills being furthered by our educational process.

Unlike other European countries we can look forward to an increase in employment, an increase in quality employment, rather than looking on these new processors with fear and apprehension at the possibilities that they will cut down the number of people at work. Our Fianna Fáil philosophies on bringing in quality, clean industries into this field are bearing fruit very substantially. This was illustrated very forcibly recently in the agreement about the telecommunications equipment we are to manufacture in Tallaght in conjunction with French producers. Our telecommunications industry is in a pretty sorry state at the moment.

There is no doubt that this agreement will help very considerably to improve the structures within the Department of Posts and Telegraphs and provide an opportunity for this vital sector of our community to take advantage of the most modern equipment. It also provides a challenge to the workers in the Department of Posts and Telegraphs to respond to this innovation. It challenges them to respond in an affirmative way. The Government are giving them a chance to acquire equipment of the most modern nature. Therefore, it is up to the workers to respond and use that equipment in the most modern and efficient manner. If there are structures within the Department which are not efficient, and which do not allow for the introduction of modern methods, the workers should say to themselves, "We will have to face up to this and create a situation in which the people will get the type of telecommunications to which they are entitled".

One important spin-off is that if this does happen—and it should happen—we will have a chance to develop a very substantial possibility for exports. The past decade, since we joined the Common Market, has seen a total turn around in the type of exports this little country has achieved. When we went into the EEC, the ratio of our agricultural exports to industrial exports was something like 70:30 per cent. It has now come down to a relativity of 45:55; 45 agricultural and 55 manufacturing. Last year we exported something like £3,500 million worth of manufactured goods. This was absolutely fantastic achievement for a small country like ours and could only have been brought about by a succession of budgets giving the opportunity to workers to bring home a decent wage package and to industrialists to get a decent return on the money they invested in their industry.

The EEC took a great amount of the increased output I have mentioned, but our UK market did not decline in volume or in value terms, in spite of virulent anti-Irish postures which became evident in that market at different times over the past six or seven years. This is a fantastic export achievement in anybody's book. It is not the glory of one sector alone. Every sector of our economy played a part in it. The new industries, the expanded agricultural production, and the foreign services we have succeeded in establishing all played their part.

Our foreign services are a cinderella part of our economy about which many people do not even think, but it is an objective fact that consultant engineering firms, consultant architectural firms and business advice firms are operating commercially throughout Africa, the Far East and the near East. Irish engineers, architects and business advisers go out to all these areas and contribute quite significantly to the advancement of the area in which they work, and also contribute significantly to our balance of payments.

In this respect our foreign aid takes on a very positive aspect. Much of the foreign aid we give is not necessarily in the form of money but of expertise provided to some of the developing countries. One of the countries which benefits very substantially was mentioned during Question Time today, that is, Lesotho. We are sending technical people to help them to get their electricity industry and their communications system into operation. We sent a herd of Connemara ponies to improve their horse industry. That is one way we can contribute, value wise, to the requirements of those countries. If we sent people to help the economies of those countries it would have a greater impact than contributing money and permitting the people to spend it themselves.

One of the most important aspects of the budget relates to housing. The provision of houses has been recognised for many years as of the utmost importance for the country. This is reflected in the fact that we can boast one of the highest ratios of house-ownerships in the world. I understand that 75 per cent of householders own their own houses. This is a unique situation and one which we can be proud of. We are fortunate that our building industry is mainly controlled by Irish people. Many of those who emigrated some years ago returned with the expertise they gained abroad and established business concerns which have contributed significantly to the drive to help people own their own homes. Last year 26,000 houses were built, an unthinkable figure a few years ago. That is a fine achievement under present economic circumstances and at a time when taxes are kept within relatively acceptable norms. We are in the worst economic climate ever experienced and yet we can produce more houses than were built by the National Coalition.

The provision of finance for housing is of great importance. Finance for housing comes mainly from building societies, insurance companies, and, latterly, from banks. Most of the money is raised at home and very little foreign money is involved. Surely in this area there is a challenge to our financial institutions to go abroad to see if the money available at cheaper rates of interest in Continental countries could be used to the advantage of those anxious to buy houses here. It is understandable that there should be anxiety over fluctuating exchange rates and that these may inhibit companies anxious to borrow money for that purpose. However, I view that as shortsighted and timid on the part of the financial institutions. It would be wrong for them to say that in the event of borrowing abroad the home borrower should bear the full brunt of the uncertainty in relation to fluctuating interest rates. Surely those financial institutions are able to average out those fluctuating exchange rates to the benefit of possible home-buyers.

Another point that comes to mind in relation to this is the position of the pension funds of many industrial organisations. There are restrictions on the use of such funds in order to ensure that the contributors get the full benefit, but instead of investing such money in expensive and extensive office blocks that money should be lodged with building societies. Contributors to those funds would be happy in the knowledge that their money was helping people acquire their own homes. In my view it should be possible to find funds for office blocks and such expensive buildings elsewhere. Our building societies have a great record of stability. One seldom comes across people who default on repayments to building societies. Those societies have always been a pillar of the financial establishments here and as such should be considered suitable for the depositing of pension fund contributions.

Local authority housing construction has kept pace with the demand of young couples. This has happened because the capital allocation in the budget kept pace with the demand for houses. This year Dublin County Council will get £11,150,000 for housing while Dublin Corporation will get £32 million. It must be remembered that not a penny of that will be collected from private house owners in the form of rates. It is a great achievement to keep our tax collection within reasonable constraints and at the same time provide massive sums of money for local authority housing. There is an obligation on local authorities to spend wisely the money allocated to them for housing. I question the lack of enthusiasm of some local authorities in spending that money. It is sad to think that some contracts which were offered for tender two years ago have not yet commenced. When local authorities are allocated money there is an obligation on them to spend it to the best advantage. This situation is contrary to the claims made by the Opposition that cut-backs have taken place. We have honoured our commitments and will continue to do so to our young people. As far as possible they will get houses.

The achievements of our semi-State bodies are enviable. There are more enterprises run by semi-State bodies here than there are public companies. However, the sad fact about many of them is that while they are engaged in commercial activities very few have returned a percentage on the capital invested in them. The sad fact is that in order to expand they very often have to come back to central Government for capital. Very often these services are highly necessary. They are services that have put this country on the map worldwide. The companies are names that are internationally recognised. Often it is not realised that they are in fact semi-State companies. Aer Lingus, Irish Shipping, B & I, the ESB and Bord na Móna are semi-State bodies. All were funded totally by taxpayers' money and the only return there is on the many millions of pounds that have been invested in these companies is the PAYE workers' tax that comes back into the Exchequer. The performance of these companies is something that obviously we must be proud of because it has been of very great benefit to the country as a whole. Nevertheless they still depend on subventions from central Government to expand.

The one company that has flown the flag of Ireland throughout the world with distinction is Aer Lingus and they are to be congratulated on the initiative and on the thrusting ability that has steered them into their ancillary subsidiary productions; I refer to their investment in and their collaboration with hotel chains throughout the world, their engine maintenance operations and their various activities in promoting Ireland throughout the world. As a company they have put a quality name on this country throughout the world. The money that was put into that company was certainly very well spent and I am not quibbling for one second at anything that any of these companies get. It is the only way that this small country of ours, emerging in this century, could possibly get itself on the road to prosperity and give itself the chance of giving a decent standard of living to the younger people coming along.

The semi-State bodies that I refer to are also users of the new technologies that I referred to earlier. They are highly sophisticated industries in many ways and they are taking advantage of the new technology that we are bringing in all over the world. But it must be remembered that because they are not so viable commercially there is a very heavy responsibility on the people engaged in those industries to give a return on the investment that the country has put into them by responsible management, by responsible working and by a responsible attitude towards the whole community. The workers' PAYE return is the only return that comes back to the Exchequer on the capital supplied so the worker therefore is actively engaged in the promotion of job creation; he is actively engaged, by his tax contribution, in the IDA programme, in Córas Tráchtála, in selling our goods abroad. Therefore he is actively participating in the whole economy of the country and the people who are in the semi-State bodies should be extremely proud that this little country has produced such a variety of enterprises that are working extremely well and they should be happy that the opportunity is there for them. I suggest that they have a very heavy responsibility to play the game and to make sure that these things run on an even keel and that they keep going forward. If this attitude comes through the whole of the working sector then we can look forward to this budget producing the type of results that we envisaged in it, a better standard of living for more people at the end of the year than we have at the moment.

Mr. D'Arcy

One would wonder, listening to the Government, how far they can carry the hypocrisy that has been going on since this debate began. The background to this budget is as follows: in 1979 we had a borrowing of approximately £1,004 million; we had a deficit in the budget of approximately £522 million and an inflation rate of 16 per cent on average. This budget of 1980 has been called all sorts of names. Some say it is a con budget; others say it is going to create a great economic climate. But whatever it does there is one thing certain and that is that people will no longer be fooled by the promises of the Government.

This budget has been reasonably well evaluated by the people in general as attempting to undo the wrongs and mistakes made by the Government in 1978 and 1979. Unfortunately I cannot see in its measures any real long-term strategy whereby people investing in the economy can be guaranteed that their investment will be profitable and this is absolutely vital. There is no incentive in the budget. I believe it will act as a disincentive to further investment with the exception of portion of the grant aided investments by the IDA in factories and new projects. But even there the cost of production is soaring. The Government are responsible, by their actions since they went into Government in 1977, for this. There are, of course external factors outside the control of any Government. But the Government are well aware of these factors and they should be more careful in taking decisions that further increase our production costs. It is very important because they affect our competitiveness on the foreign market and that is vital to the economy. But by a particular date in May costs will have increased by 10 per cent if they go on as they are doing at present. We will be hearing of a situation where our exports will suffer a serious setback on the foreign markets. We are an exporting country with agriculture on the one hand and industry on the other. Our aim should be to increase our productivity in agriculture and in industry thereby increasing our exports and preserving those markets and exploring new markets. These items are vital to the economic progress of our nation.

Those engaged in drawing up the budget should bear these factors in mind and should make the necessary provisions accordingly. I am sorry to have to say that this budget in no way preserves these important factors which are necessary to growth of our nation. In looking for the first time at the budget one would get the impression that it was a great budget but, on analysing its implications, a completely different picture emerges. This is what has happened since the budget was announced.

There are welcome provisions in the budget. We have increases in the social welfare benefits, increases in old age pensions and reliefs for PAYE people which were certainly well deserved. Some of these increases create certain imbalances and will cause further problems for the Government. I very much object to the scurrilous attack by the Government on the farming community and their attitude of indifference and I will deal with that matter later.

Government speakers have spent much time complimenting themselves on the PAYE concessions but it was the ruling of the courts which was responsible and the Government had no option. Those earning less than £100 per week received very few benefits. In a survey of factories in County Wexford I found that wages generally range between £80 and £100 per week, excepting 10 per cent of staff who are earning more. As a result of the PAYE concessions the increase for an average family is about £4 or £5 per week. With the present level of price increases any benefits as a result of the budget will be quickly eroded. Many people employed in factories or as forestry or farm workers earn between £60 and £80 per week. We must realise how many lower paid workers there are in the community. We have not heard anything from the Government side about such people. Taking an average family with four children, prior to the budget they paid little or no tax and received no benefit as a result of PAYE concessions, yet they must bear all price increases.

It was interesting to hear the Minister for Finance and the Taoiseach describe taxes as "discretionary". People in the Taoiseach's constituency may use public transport but there is room for very little discretion regarding the use of a car in an area like Wexford. The centres of employment are Arklow, Enniscorthy and New Ross and the majority of people have no option but to use their cars in getting to work. For a farmer a car is not a luxury but an essential. With the exception of urban areas, it cannot be said that the terms of the budget regarding petrol are discretionary. Most lower paid workers will be considerably worse off as a result of the extra tax on petrol. This is not my understanding of social justice. These workers form a large percentage of the population and they will face a reduction in living standards in 1980. They are in a hopeless position. Shortly after the budget there was an increase of 77p in the price of bottled gas and most of these people depend on gas for cooking or heating. Any benefits as a result of the budget will be quickly eroded.

Deputy Corish outlined some of the benefits to the higher paid. Anyone earning £20,000 per year receives an increase of £44 per week while the person earning £100 per week receives an increase of £4 per week. There should have been some attempt to improve the position of the lower paid. This may not apply in Dublin, with the exception of council workers, but it certainly applies in rural constituencies.

I welcome the increases in old age pensions but feel that these benefits will be quickly eroded as a result of price increases. In considering percentage increases we must remember that the old age pension starts from a very low base and the non-contributory old age pension is only about £16.80 per week.

The increase in unemployment benefit is also to be welcomed but it must be matched by a corresponding increase for the lower paid. The gap between the lower paid and those on the dole is so small that we must be careful not to remove the incentive to work. The increase of 20 per cent may well bridge the gap between the lowest paid and those on the dole and it might not pay some people to bother working.

I am extremely disappointed at the absence of a substantial job creation programme. Two worthwhile schemes which should have been strengthened are the temporary youth employment scheme and the AnCO community youth training programme. These were concrete efforts to provide gainful employment for young people and I give the Government a certain amount of credit for their creation in the 1978 and 1979 Budgets. With 51 per cent of the population under the age of 25, the youngest population in Europe, this budget holds out no hope for young people.

Many people disabled because of accident, injury or disease must use an aid or specially designed equipment to enable them to cope with daily tasks with the minimum of assistance. VAT was charged at 20 per cent but the Government have seen fit to increase that to 25 per cent. This will add considerably to the cost and cause great hardship to the families of the disabled in providing these aids so that they can live at home. This type of equipment should be zero rated. How can we talk of social justice when a disabled person is asked to pay an extra 25 per cent for badly needed equipment? The present Taoiseach, when Minister for Health, said on numerous occasions that he would look into the matter. The amount of money involved would be very small and I ask the Minister for Finance to remedy the situation.

The increase of 20p in the price of a gallon of petrol can only be described as a deadly blow to the economy. It comes at a time when we have an inflation rate of 16 per cent and will severely damage the economy. This increase, which was described by the Taoiseach as a discretionary measure, will damage our economy seriously. What discretion have people in the rural areas in this regard? What I object to most is the further increase of 5p on a gallon of diesel, An increase which was slipped in very quietly but which will have severe effects on agriculture. It will add enormously to transport costs. The Taoiseach made the point that the increase in the price of petrol was aimed at reducing consumption but when questioned on this he said that the expected reduction is 2 per cent. That is not very significant. The Government must know that there is more than an even chance that, instead of decreasing, petrol consumption will increase. Therefore the increase in duty is aimed specifically at raising the maximum amount of revenue. Undoubtedly, the increase will have the desired effect, having regard to the pattern of increasing petrol consumption throughout the seventies.

It is indeed highhanded to ask the motorist in this year to contribute £130 million to the Exchequer. One would not mind so much if this money were to be used for improving the road network, but that is not the case. Our roads are the worst in Europe and the failure of the Government in this area, especially in regard to the construction of arterial roads, is a sad reflection on our administration. We talk about the need to conserve energy but there is a great loss of energy because of our road network situation, whether we are talking in terms of manpower or of petrol. Capital investment in arterial roadworks falls far short of what is necessary. The abolition of tax on cars was a crazy idea but this promise on the part of Fianna Fáil, together with the various other promises outlined in their manifesto, were responsible for their return to office as a result of so many young people believing what was promised. The Minister for the Environment should be very happy now if he had for expenditure on road works the £45 million revenue that was lost as a result of the abolition of road tax. A good road structure is basic to the needs of the nation. It is part of our infrastructural development but considering our present rate of progress we shall have a long wait before the roads are brought up to the desired standards.

Because of the condition of the roads many of the vehicles on them are potential killers. I refer especially to juggernauts. On a couple of occasions accidents involving such vehicles resulted in multiple deaths and on many occasions, too, I have seen juggernauts turn over. In some cases the condition of the roads is responsible for such accidents. Our roads are not designed for that type of traffic. The Minister for the Environment would be doing a good day's work by bringing in legislation to control such traffic. Those large vehicles can be seen in large numbers on the Dublin to Wexford road on their way to Rosslare and some of them, even laden, travel at speeds of 50 and 60 miles per hour. Many of the drivers coming from the Continent admit that, though our road signs are standard for Europe, they are not able to read them.

One road that warrants special mention is the road from Arklow to Dublin. This road is in a scandalous condition and, having regard to the rate of progress being made by Wicklow County Council, we may not expect a programme there for the next 25 years. However, it is hardly fair to blame the county council since they are not being given the money necessary to get on with the job. Down through the years there have been numerous accidents on this stretch of road. I do not know how the situation can be tolerated for the next 25 years. The county council concerned would seem to get very bad value for money because we have seen on numerous occasions that a portion of road opened up by them continues to be opened up at four-yearly intervals.

We should have proper arterial roads from our coasts and to the industrial areas of the country. The amount collected by way of road tax on cars was essential for road works but the abolition of that tax has left us with the worst roads in Europe. One wonders what the Naas road will be like within ten years having regard to the amount of traffic on it. In any further realignment of the roads consideration should be given to the need for both overpasses and underpasses because even on so called high speed roads traffic travelling at 60 miles per hour can constitute a great danger where two main roads cross each other. In that respect, the Naas road is a death trap.

I come now to the sector in which, as a rural Deputy from Wexford, I am very interested. I refer to agriculture. It seems that the Government no longer considers the agricultural industry as playing an important role in our economic development. In his Budget Statement, the Minister for Finance said, as reported at column 729 of the Official Report for 27 February 1980:

A strong and developing agricultural sector is basic to the economic wellbeing of the nation.

As reported in the next column the Minister continued:

I am anxious that understanding between farmers and workers in general be promoted and fostered.

The Minister went on:

I believe there is universal acceptance of the principle that the amount of tax paid should reflect the income of the taxpayer.

I would point out that there is provision for £46 million in rates, £10 million in levies and £7 million by way of resource tax and that not one of these measures bears any relationship to income. If these are not taxes, what are they? The Minister stated also that he intended to have a new mobile advisory service for taxpayers generally. That will be very welcome in any area. I am not casting any reflection on the Revenue Commissioners. They are merely doing their job. The Minister continued:

As is normal when the income tax threshold is lowered, farmers entering the tax net for the first time will have the option of presenting current year's accounts rather than the normal previous year's accounts. This option will only apply this year as the Government have decided that the tax threshold for farmers will not be furtred lowered within the next three years.

Those are some of the promises made by the Fianna Fáil Government.

In plain words, agriculture is responsible for one half of the goods sector of this economy. The potential in agriculture to influence further employment has not been recognised adequately by the Government. The volume of output from agriculture can influence the total level of employment in several ways—first, to stop the decline of onfarm population, which I believe to be very important and, secondly, the processing of agricultural products which has never got off the ground here. I believe there is great scope in this direction if the proper research was carried out as far as markets and processing are concerned, plus the spin-off in the servicing industries which can be generated. I have always believed that the growth of agriculture is basic to our economy.

The 1980 budget, as far as agriculture is concerned, comes after the worst year of the decade. In most areas there was no price increase whatsoever in 1979 for agricultural production while the costs of production increased by approximately 20 per cent. I know there are claims to the effect that, in real terms, agricultural income was down by 4 per cent. I am not prepared to accept that figure. I believe agricultural income was down by about 6 per cent and, in certain cases, as much as 10 per cent. After all these problems one would expect that charitable appreciation of these facts would prevail. Instead agriculture was treated to a specially designed tax system with special conditions that apply to no other sector of the community. A resource tax was levied on us like no other section of the community. Rates were imposed on us, but I am prepared to accept that rates apply also to industry and private business. A restriction was placed on our capital allowance, something that applies to no other section of the community. We were subjected to a special condition in relation to stock. I do not know who thought up that one but I know it has been in operation for some time. Then we were subjected to the famous levy implemented last year. Let us take a look at the resource tax. The resource tax of £3.50 per £ rateable valuation is, as everybody recognises, the thin end of the wedge and is clearly seen to be such by the farmers. I must point out that the resource tax bears no relationship whatsoever to income. Of course the assurances given by the Taoiseach that this is a temporary measure only can be taken with a grain of salt. One could describe the present Government's promises to those engaged in agriculture as a sick joke. Indeed, the amount of money to be collected by this measure—£7 million—is comparatively small. Nonetheless it is seen to be a system under which the amount will increase annually while the starting-off point as far as valuation is concerned will be lowered, as happened when Fianna Fáil assumed office in 1977 in relation to income tax.

This resource tax is creating serious dissension amongst the agricultural community and will cause serious damage to the industry. One would have expected that the Government would have learned a dear lesson from the 2 per cent levy of last year when first there were the announcements made on budget day. There then elapsed a period during which certain negotiations took place with the agricultural community. I might point out that the imposition of the 2 per cent levy in the first place was a mistake. Then there was the headline right across the press—"Surrender"—the then Minister for Finance, Deputy Colley, giving the impression that he was withdrawing the 2 per cent levy; total surrender and this upset every PAYE taxpayer. That was the second mistake and then, the third, when the Government said: "You cannot agree on a tax system amongst yourselves so we will reimpose the 2 per cent."

One might have expected that Fianna Fáil would have learned from those unhappy days for both the PAYE and farming sectors. They did not. This year they come along with a further controversial tax, this resource tax, to start another big row, particularly when the amount of money about which we are speaking is £7 million only. Yet we had the Minister making statements on budget day to the effect that all taxes should bear some relationship to actual income or profits. As far as I and the agricultural community are concerned this resource tax is a non-starter. I would hope that the Minister for Finance would have the good sense, even at this stage, to withdraw it.

In regard to the restriction on the capital allowances I should like to read what the Minister had to say at column 1875 of the Official Report of 12 March 1980:

In looking at this budget farmers and their leaders have perhaps taken a one-sided, negative and selfish viewpoint of it. Nobody likes to have to pay tax and so everyone criticises those aspects of a budget which penalise himself or herself. We hear far less about the budget changes which confer benefits or advantages. The farmers' representatives do not appear to see the good points in this budget. At any rate they do not highlight them. I have already mentioned the liberal concession on inheritance tax.

We did not notice it—the liberal concession on inheritance tax from £100,000 to £150,000. The inheritance tax was introduced in 1975 and, if inflation were taken into consideration, that figure should have been trebled at least.

The Minister continued:

We should not forget that the 2 per cent levy has gone. Those farmers already on accounts and those entering for the first time are going to benefit from the very generous income tax concessions.

I am not sure what concessions the Minister is talking about. They are probably the income-splitting ones where special conditions apply which, as far as concessions are concerned, do not come into the reckoning.

I should like to refer also to the assurances given by the Taoiseach. The restriction on capital allowance to 30 per cent of net profits applies only to plant and machinery and will be seen as a special measure applying to farmers only, creating further doubts in their minds.

I should like to turn now to that part of the Minister's budget statement in regard to the taxation of business, in particular to the paragraph headed "Stock Relief" which it is anticipated will cost the Exchequer £3 million in 1980. Prior to this budget an option was available, known as the notional system. We must describe the present system as a straitjacket. We are faced now with a special stock allowance, the most damaging aspect of the entire package, and it was so described by many Fianna Fáil speakers. If this measure is implemented in its present form it will do irreparable damage to our large and small cow herds. The present advertisement of the Department of Agriculture on television is rather interesting—that there is prosperity in numbers sounds peculiar to most farmers. The advertisement should read that there is extra tax in extra numbers. When farmers realise—and it is not yet realised by them—that the appreciating value of stock in their herds qualifies for tax assessment, it will be the beginning of the winding down of the numbers of stock which in turn will have a detrimental effect on the whole of our economy, not merely on agriculture.

Another defect in the operation of this relief is that the restriction is applied to taxable profits before capital allowances, thereby restricting stock relief by a figure completely unrelated to the cash available for appropriation. This is a very serious defect. I should like to point out that there is no provision in the stock allowance for disease eradication from one year to another. There is no provision for debt when land is transferred to a son. There is no provision for falling stock value from one year to another.

I strongly advise the Minister to give these proposals serious consideration before he implements them. He has made no provision for adjustment from one type of farming to another. I am prepared to admit that the Revenue Commissioners have not a lot of experience of taxing farming profits, but if they intend to press this aspect of it I have no doubt as a practising farmer that they will do irreparable damage to the whole agricultural industry.

There should be a simple way whereby stock would be valued for 1980 and revalued in 1983 with the appreciated value assessed for tax purposes after taking inflation into consideration. This would simplify the operation and at the same time act as an incentive to increase stock. The Revenue Commissioners are trying to compare stock on a farm with stock in a shop or factory. That cannot be done, and there is a simply remedy. They have only to telephone TB offices in different areas to get an accurate count of every beast on every farm. A farmer cannot hide a beast in a bedroom or in the kitchen. I do not know if the Revenue Commissioners realise that in certain cases where there is a herd of 50 cows the farmer breeds his own replacements, which means that he will have 50 young cattle following that cow herd each year. This means that most years the herd will appreciate by £100 per head.

Under these proposals an unfortunate man in that situation will be accessed for about £2,500 on a 50-cow herd. This will be added to his tax assessment, a ridiculous situation which cannot be allowed to continue. Last year the Minister said he would meet the farming organisations to try to work out a tax system. If the present Minister is to follow that example, are we to have another showdown, another situation which will get everybody's back up? The PAYE people do not understand the farmers' situation. By interfering with stock allowances in that way the Government will lose revenue. They do not understand the damage that can be done by this provision. I do not know much about the present Minister for Finance but his predecessor had no knowledge whatsoever of the damage done by his 2 per cent levy last year.

If the stock relief is implemented in its present form it will severely damage agricultural growth and expansion in the eighties. In this connection I appeal to the Revenue Commissioners to get a little information on these matters before they put this into operation. They will get such information from a practising farmer, not from some books.

In 1977 Fianna Fáil's manifesto held a definite promise to retain the notional basis of assessment, but that promise did not last very long. In the 1978 Budget the Minister compelled farmers to apply for the notional basis of assessment and he said that basis would be retained for three years. I question the legality of the Minister now declaring the abolition of the notional system. Given that assurance in 1978, the majority of farmers planned accordingly. One would have expected the Government to honour their own legislation and to give a reasonable period of notice so that farmers could adjust accordingly. The type of action being introduced here must be described as irresponsible. It seems the Government's right hand does not know what the left hand is doing.

People who accepted that situation in 1978 did not keep any accounts in 1979 in the belief that it would be 1981 before they would have to move on to the accounts system. Many people did not keep accounts in 1979. What will the Revenue Commissioners do to assess farmers' tax in 1980? They cannot use the 1979 figures because there are none available. Will they therefore allow farmers to put forward 1980 figures in 1981, when they become available? I contacted the farming organisations to find out what the position is and I have been told that they cannot produce accounts because they have not got them because the Minister told them in 1978 that he was prepared to retain the notional basis, and indeed he compelled farmers to stay on that basis. In other words, the Minister is breaking his own law. I want an indication from the Minister of where these people will stand in 1980.

These budgetary provisions for the agricultural community are designed especially to extract money irrespective of ability to pay. He has raised £46 million in income tax, £7 million from the resource tax, and levies will raise another £10 million. Taking all these measures into consideration, adding income tax, the Minister will get in the region of £100 million. The Minister said he had not predetermined the amount of the tax on farmers. I say he predetermined a large proportion of it. The budget has not done anything to improve the confidence in the agricultural industry—indeed it has aggravated the position. The indications are there clearly: refusal to buy feed for stock for the 1979-80 winter, the slow movement of fertilisation by lime. The application of lime and phosphorous in the coming year determines the amount of produce from the land.

Debate adjourned.