Dáil Éireann debate -
Tuesday, 13 May 1980

Vol. 320 No. 9

Finance Bill, 1980. - Finance Bill, 1980: Second Stage.

Minister for Finance (Mr. O'Kennedy)

I move: "That the Bill be now read a Second Time."

The primary purpose of this Bill is to give statutory effect to certain taxation changes announced in the budget including income splitting for married couples, changes in farming taxation and in excise duties and the introduction of a 10 per cent rate of corporation tax for manufacturing companies. The Bill also incorporates a number of concessions which were not announced in the budget and which arise mainly as a consequence of income splitting. In addition it contains provisions in relation to the administration of the taxation system.

The principal aims of my 1980 budget were to make progress towards greater equity in the tax system and to make a start on reducing the level of Government borrowing, particularly for current purposes. I sought to achieve these aims while at the same time protecting the sources of economic growth and improving the position of those on lower incomes.

In the budget the most significant development from the taxation viewpoint was the introduction of income splitting. This is a radical improvement which goes way beyond the requirements of the Supreme Court decision. The Government took a very positive approach to the situation and decided to give immediate effect to their longer term intention of introducing income splitting as expressed in the national understanding. They were determined that the benefits of income splitting should not be restricted to couples with two incomes but should be shared by all couples. The net effect of the budget decisions on personal taxation is an unprecedented degree of tax relief. This in turn has increased very substantially the purchasing power of households. Special attention in this respect was given to the position of those on low incomes by removing large numbers of them from the tax net completely. I will return to this topic later when dealing with the appropriate sections in the Bill.

Reference to purchasing power leads me to the question of incomes. We are now moving towards the next phase of wage negotiations and I sincerely hope that discussions can get under way without delay and be concluded successfully. I must emphasise again the absolute need for moderate increases in pay. All progress is undermined if we pay ourselves inordinate wage increases. We must take example from our partners in the European Monetary System where wage rises generally are far below what we have become accustomed to. If I may go further afield, Deputies will have noted the major upheaval in Sweden in the past week which led to a final settlement of less than 7 per cent, a figure deemed to be exceptionally high by their standards.

It must be a matter of most serious concern to us that demands continue for very high increases, particularly in the public sector. These demands frankly, are well beyond what the Government would have regarded as appropriate when the budget was being framed. The consequence, unfortunately, if these are conceded must be more taxation and undermining of the benefits introduced in this year's package of tax reliefs or else a reduction in public expenditure.

Is it not reasonable to expect that in pursuing special or general claims, negotiators would take fully into account the real and significant increases in income as a result of the unprecedented income tax allowances being introduced in this Bill? Is it not reasonable to suggest that every inordinate increase for any special group—and every group tends to think of itself as special—can only be at the expense of taxpayers generally, or even at the expense of the really special group in our society, the old, the sick and the handicapped? The Government's concern for this group was particularly reflected in the budget and I believe this concern is fully shared by the community at large.

The community cannot be called on indefinitely to fund higher and higher income increases. The higher these increases, the less effectively we will be able to respond to the needs of the weaker sections of society and, indeed, the less we will also be able to provide for the creation of more employment.

I am making an appeal therefore to wage negotiators to take the unparalleled tax concessions of the 1980 budget into account when they sit down at the negotiating table. There has been much reference to the impact of the indirect tax increases in the budget on the consumer price index. Yes, it has had an impact, less than 4 per cent. This must be balanced against the increase in purchasing power granted by the income tax concessions. It is the increase in disposable incomes as a consequence of the budget measures rather than the consumer price index change that should be the decisive factor in influencing the size of wage demands.

The external situation makes it more necessary than ever for us to be very careful in our domestic conduct so as not to exacerbate the problems which face us. In this year's budget, I avoided taking more stringent action to close the gap in Government finances and in the balance of payments, which would have been desirable in more favourable economic circumstances, but which might in present circumstances have sent the economy into recession. The high degree of Government borrowing, particularly borrowing to finance current expenditure, and the large deficit in our balance of payments must be corrected. The budget changes will not solve our problems all at once; the progress which they have set in motion will have to be built on in future years.

I now turn to the individual sections of the Bill. I do not propose to comment on all the sections but I would like to identify the main provisions.

Section 1 exempts from income tax those with low incomes. The exemption limits, as announced in the Budget Statement, are £1,700 for single and widowed persons, and £3,400 for married couples who opt for assessment on their combined income.

Provision is made in the following section for increased exemption limits for the elderly. For those who are 65 years or over but under 75 years the exemption limits are £2,000 for single and widowed persons and £4,000 for married couples. Limits of £2,500 for single and widowed persons, and £5,000 for married couples, are available to those aged 75 or upwards.

Sections 3, 4 and 5 deal with the personal reliefs. They contain provisions to (a) adjust the personal allowances to take account of the new scheme of taxation announced in the budget for married couples, (b) increase the one-parent family allowance from £250 to £500, (c) allow widows, in the year of bereavement, the married allowance of £2,230 instead of the widowed person's allowance of £1,185, (d) provide the special PAYE allowance of £400 as announced in the budget, and (e) decrease the ordinary child allowance by £23. As indicated in my Budget Statement, this reduction is taking place in conjunction with improved social welfare children's allowances and will ensure that resources, necessarily limited, are directed to those most in need. There are also other personal reliefs relating to incapacitated persons.

Section 6 provides that where a married couple opt for assessment on their aggregate incomes, the limit on life assurance premiums which qualify for relief will be increased from £1,000 to £2,000. Section 7 relates to income tax relief in respect of loan interest. Where a married couple elect to be taxed on their combined incomes the maximum amount of interest which may be allowed for income tax purposes is increased to £4,800. The limit for single, widowed and married persons assessed as single persons remains at £2,400.

Section 8 contains the income tax rates and rate bands announced in the budget. Where a married couple elect to be assessed on their combined incomes they will be entitled to the rate bands set out in Part II of the Table. These bands are twice those applicable to single persons and give effect to the scheme of income splitting.

Sections 9 to 16 are concerned with a variety of changes including tax exemption for military service pensions and an improvement in relief for loss of employment compensation. The limit on relief for married couples in respect of residence related expenditure is being doubled and provision is being made to enable a trade union to increase provident benefits for its members without losing its exemption from tax on dividends and other income applicable for such benefits.

Section 13 provides for the due dates on which the self-employed, including farmers, will pay their tax.

Chapter II deals with the taxation of married couples. Sections 192 to 198 of the Income Tax Act, 1967 have been rewritten to take account of the Supreme Court's decision on the taxation of married persons and as a consequences of the Government's decision to introduce income splitting for all married couples.

The new provisions will give married couples the choice of three options (a) assessment of each spouse as a single person, (b) assessment of the aggregated incomes of both partners, and (c) where aggregation is exercised, the couple will have the further right of separate assessment. In effect they will be able to apportion between them the total allowances and reliefs to which they are entitled so that each spouse may be separately responsible for his or her share of their total tax liability.

Section 17 contains the revised special provisions for married persons. Each spouse, unless both otherwise elect, will be charged to tax as a single person. Where a husband and wife so elect, the husband will be chargeable to tax in respect of his own and his wife's income. This election may be made at any time in the year of assessment and will apply for subsequent years unless it is withdrawn by either spouse.

For the vast majority of married couples, whether or not both spouses have income, it will be more beneficial to be assessed on their combined incomes. To facilitate these couples it is provided that, unless notice to the contrary is given by either spouse, married couples will be deemed to have elected for aggregation.

Where the couple are assessed on their combined incomes, they will be entitled to make application for separate assessment. The effect of such an application is that although they will still retain the benefits of income splitting, in that their total tax liability will not be increased, their allowances and reliefs will be apportioned between them and each spouse will be answerable for the tax in respect of his or her income.

Chapter III makes provision for the changes in the taxation of farming profits which I announced in my Budget Statement. Since the budget, we have had very useful and satisfactory discussions with the farming organisations. As I indicated in my reply to the budget debate, these discussions have resulted in agreement on a number of technical adjustments to the arrangements announced in the budget.

Section 19 provides for the lowering of the threshold for liability from £50 RV to £40 RV. It also provides for marginal relief between £40 RV and £49 RV. Section 20 allows farmers between £40 RV and £50 RV, who are becoming liable for the first time, to opt to be assessed on the basis of current year's accounts rather than the normal previous year's accounts. Section 21 ends the notional basis of assessment. As from 1980/81 all farmers who are liable for income tax will be assessed on the basis of their actual profits as shown in accounts.

Section 22 amends section 28 of the Finance Act, 1974, which provides for the restriction of the personal allowances which can be set against the non-farming income of a farmer between £20 RV and £40 RV. It provides that, where the non-farming income in question is the income of the wife, she will be assessed on that income as a single person but she will, of course, qualify for child allowances. As the husband's farming profits are exempt in such cases there will be no option to aggregate.

Section 23 restricts to 30 per cent of net profit the total amount of capital allowances which can be claimed in any one year where a farmer claims accelerated depreciation for plant and machinery. The restriction will not apply where only the basic rates of wear and tear are claimed. Neither will it apply in the case of the farm buildings allowance or free depreciation for farm works such as fencing, drainage and so on.

Section 24 amends section 17 of the Finance Act, 1974, to take account of the Supreme Court decision on the taxation of married couples. Section 17 was designed to prevent division of holdings for the purpose of avoiding liability. The present section provides that land which is both owned and occupied by a wife in her own right will not be aggregated with that of her husband for the purposes of the threshold. Where land is jointly owned each of the joint owners will be deemed to occupy all of the land for the purposes of the threshold for liability to income tax on farming profits. The actual tax charge will, of course, be determined by reference to the appropriate share of the profits.

One particular issue which I know is of concern to farmers is income averaging. Technical discussions between the farming organisations and the Revenue Commissioners are proceeding with a view to the inclusion of the necessary provisions in next year's Finance Bill.

Chapter IV containing sections 25 to 31, provides for the resource tax. It will apply at a rate of £3.50 per £ RV to all holdings of £70 RV and over, with marginal relief applying between £70 RV and £79 RV, and will be payable on 1 October. The resource tax will not be a deductible expense for tax purposes. I would like to repeat that it is not the Government's intention that the resource tax should be a permanent feature of the farm tax system. It will be reviewed at the end of the year in the light of the operation of the farm tax system generally and the overall amount of the yield.

There is one section in chapter V, section 32, and this provides for the continuation of the special 25 per cent corporation tax rate for manufacturing companies achieving certain employment targets. As announced in the budget, the scheme is being continued to end-December 1980 after which the new 10 per cent corporation tax rate will take effect for manufacturing generally.

Chapter VI provides for a new rate of corporation tax of about 10 per cent in respect of income arising to companies from sales of goods manufactured by them in the state. The scheme is broadly intended to replace our major industrial incentive of export sales relief and also Shannon relief. The new scheme will be applicable to goods sold on both export markets and the home market. It will operate from 1 January 1981 to the end of the century and will provide not only a very attractive incentive to foreign industrialists but will also give Irish entrepreneurs a most favourable climate for investing in our future growth and prosperity.

Distributions from profits which have borne the new rate of tax will be liable to tax in the normal manner but will carry a reduced tax credit of one-eighteenth which represents about one half of the tax on the underlying profits.

Section 34 defines goods for the purposes of this chapter and also brings manufacturing activities not involving the actual sale of goods within the ambit of the relief. As is the case in regard to export sales relief, sales into intervention are excluded.

The main relieving section is section 36. This provides for a reduction of seven-ninths—that is, from a rate of 45 per cent to a rate of 10 per cent or, in the case of the "small companies' rate", from 35 per cent to about 7.78 per cent—in the corporation tax applicable to income from the sale of goods. The relief will be available subject to a claim being made within a prescribed time limit. The section specifies the method to be used in the computation of relief, the principal feature of which is that tax falling to be reduced is to be quantified as the same proportion of the corporation tax payable by a claimant company on its total profits exclusive of capital gains as its income from the sale of goods, arrived at by reference to its sales, bears to its total chargeable income.

Section 37 and 38 terminate export sales relief and Shannon relief as from 1 January 1981. A company entitled at that time, however, to export sales relief or Shannon relief may continue to claim that relief until its present span of relief expires or until it opts irrevocably to avail of the new relief. I am also making provision for the granting of assurances in relation to export sales relief and Shannon relief in certain cases where the conditions relating to such relief are not fulfilled by 31 December 1980. Section 37 also contains a number of technical amendments to the Corporation Tax Act, 1976.

Section 39 is an anti-avoidance measure designed to counter certain avoidance arrangements between associated persons.

Section 40 provides that distributions out of income which has borne tax at the new rate will carry a reduced tax credit. It also provides the means by which such distributions are to be identified. Where distributions by a company exceed the aggregate of the company's income which has borne tax at the new reduced rate, less the tax thereon and of the relevant distributions received by it, the excess will be treated as a separate distribution carrying the higher tax credit applicable under existing law. That aggregate will constitute what is described as the primary fund. Provision is also made in this section for a reduction in relief granted to a company if the amount of a tax credit is overstated by the company in any statement accompanying a dividend warrant or cheque.

Section 41-46 are mainly of a technical nature and relate to deductions which may be made when calculating the primary fund, to reductions in tax relief and to other matters.

Chapter VII contains a number of miscellaneous income and corporation tax measures. In section 47 provision is made enabling the Revenue Commissioners to continue for a further two years the present taxation arrangements with building societies under which the societies pay income tax at a special composite rate on certain interest paid to investors. The following sections provide for a continuation of stock relief and for ammendments of some provisions relating to appeals. Section 51 implements the decision announced in the budget to limit for tax purposes the deduction allowed in respect of business entertainment expenses to 50 per cent of the amount otherwise allowable. There is a similar restriction on the capital allowances which can be claimed on assets used for business entertainment.

In relation to anti-evasion there is a provision in section 52 to ensure that the penalties for assisting another person to make false returns will apply to a person who knowingly and wilfully aids or induces another to evade tax.

The power of inspection of business records is being extended to professions. Provision is being made to limit the Revenue Commissioners' examination to the financial records only and to ensure that the person carrying on the profession will not be obliged to disclose information, or professional advice, of a confidential nature given to a client or patient. He will be obliged to produce only such documents as are material to his own tax liability.

A number of changes are being made in the capital gains tax code in line with the changes in the income tax treatment of married couples. Up to now a married couple living together obtained exemption only for the first £500 of their joint net gains, the same amount as a single person. This married couple exemption is now being doubled to £1,000. Also, the exemption of gains arising on the disposal of a dwelling-house occupied by a dependent relative of the owner is now being given to each spouse, where each spouse so qualifies.

Part II of the Bill deals with customs and excise matters.

The individual sections 58 to 64 confirm the budget increases in excise duties on beer, spirits, tobacco products, wine and made wine, cider and perry, table waters and hydrocarbon oils.

Section 65 increases by 5 per cent the rate of excise duty chargeable on motor cars and motor cycles. As I indicated in my Budget Statement, this represents an increase of the order of 3½ per cent in the retail price. Sections 66 and 67 provide for increases in the excise duties on televisions and gramophone records.

Section 68 confirms the increases in the rate of excise duty on gaming machines licences. The main rate has been doubled to £100 a year for each machine from £50. The reduced rate licence has been increased to £66 a year, but it now also allows the machines to be operated on Saturdays as well as Sundays and public holidays. Section 69 imposes a new excise duty of 20p on mechanical lighters and provides the legal and administrative framework, including penalties, which are required to implement the duty.

Sections 70 and 71 increase the rate of duty on various licences. I referred to these in my Budget Statement when I said that I was having them examined with a view to increasing the duty, where appropriate, in order to bring them up to a realistic level in present-day terms or, at least, to cover the present-day costs of administering them.

Parts III, IV and V of the Bill relate to value-added tax, capital acquisitions tax and stamp duties.

Provision is made in section 73 for an increase to 25 per cent as and from 1 May 1980 in the 20 per cent VAT rate previously applying to certain goods and services. Section 74 provides for the increase in the relief for agricultural property for capital acquisitions tax which I announced in the budget.

Section 75 is aimed at preventing the abuse of a stamp duty relief available in the case of conveyances or transfers of property between certain associated companies, and an order made last July which covered the matters now dealt with in this section is revoked in section 77. The budget proposal for a stamp duty of 1½ per cent on on-course bets entered into at horse races and greyhound races, which will come into effect from 1 July 1980 is implemented in section 76.

The last part of the Bill, Part VI, contains a number of miscellaneous provisions including increases in motor vehicle duties which I announced in the budget and increase in trade plate licences.

Finally, there are a number of additional measures which it has not been possible to finalise in the time available for the preparation of this Bill and I propose to introduce these by way of amendments on Committee Stage.

I envisaged some marginal adjustments in relation to the taxation arrangements for farmers. These will relate to the calculation of stock relief in respect of stock increases, the restriction of capital allowances for plant and machinery and the provisions for the write-off of expenditure on farm buildings. As I have already announced, I propose also to provide for an increase in the exemption limit on interest paid on deposit accounts with the Post Office Savings Bank and the Trustee Savings Banks from £70 to £150. These institutions have traditionally catered for the small saver and their position has been weakened as a consequence of the high increases in interest rates in particular. In order to enable them to sustain their business I consider it appropriate that they should be given some marginal advantage in regard to tax exemptions.

There will be a number of technical amendments relating to the administration of the tax system and I do not envisage that any of these will have significant consequences. There may also be some further proposals of a minor nature relating to excise duties.

The Bill before you is long and complex. The translation into legislation of the Supreme Court decisions on the taxation of married persons has raised difficulties which, I trust, are resolved in a fair and equitable manner for all taxpayers. I am still examining the implications of the Supreme Court judgment of 25 April on the operation of this decision and it may be necessary to introduce amendments to this Bill as a consequence of the judgment. The statutory arrangements for the introduction of the 10 per cent rate of corporation tax on manufacturing profits also gave rise to complications which required very careful analysis. In all, the new concessions envisaged in this Bill, which were not incorporated in the budget, will result in a reduction in tax revenue of almost £5 million in a full year.

I commend the Bill to the House.

Mr. P. Barry

This Bill gives statutory effect to the changes announced in the budget and to additional changes that were signalled in the budget and which are now written into this long and complex Bill.

The Bill has many serious defects but it has one half virtue. The general stance of the Government and their blinkered approach to the effects of their policies on the economy were exemplified in the budget and in this Bill. The half virtue to which I referred was the widening of the tax bands and the increased allowances for married couples. This was largely, although not completely, imposed on the Government as a result of the High Court case taken by Mr. and Mrs. Murphy.

In the immediate aftermath of the budget most married people thought they would be much better off as a result of the changes proposed by the Minister. However, when the dust settled and when the matter was examined in detail people realised that the whole exercise was, as one newspaper put it, a sleight of hand. They realised it was not a bonanza for married couples and certainly not one for single people.

To those married people on higher incomes the budget was of benefit. People with an income of more than £20,000 were given good tax reliefs. However, for those people further down the scale, when one considers the increased prices imposed in the budget and the knock-on effect of the budget with regard to inflation, the proposals of the Government meant they were worse off. The Minister and the Government should have realised that they are the people to whom he is appealing now for restraint in their income demands.

In his speech the Minister mentioned the massive nationwide strike in Sweden which led to a settlement of 7 per cent. In the past month a union official in this country spoke of a 20 per cent wage increase. I accept what the Minister has said that excessive wage demands push up inflation. This makes our goods less competitive, which means that our export markets diminish and that the home market is more vulnerable to lower priced imports. This in turn, has an effect on our employment level.

If this is known and appreciated by the Government it is extraordinary that they should have introduced a budget and now a Finance Bill whose effect will be to increase inflation. We are in a sensitive time, with the national understanding running out and discussions on a new agreement due to commence in the near future. This budget and the Finance Bill have done nothing to assist the Minister and the Government in achieving what both sides of the House, and most responsible people outside—trade union officials are number one on that list—would see as desirable. In his budget speech the Minister said that a single person earning £5,000—the average wage for an industrial worker—would gain £130 as a result of his proposals. With inflation at 20 per cent obviously such a person will be considerably worse off unless he gets a substantial wage increase. The same applies to married people at the lower end of the wages scale.

The increase of £400 granted to the PAYE sector will be of some help, but it might have been better employed in raising the level in respect of non-taxable people from £1,700 perhaps to £2,500. That allowance could be doubled for married people. It would have excluded a considerable number from the tax net and it would have given the Minister a chance to put forward a good case for moderate wage increases. However, for the second time running the Government took a petty swipe at families by reducing the children's allowances and this will not endear them to those people now affected. Last year the amount was reduced from £240 to £218 and it has now been reduced to £195. It seems to be a mark of this Government since they returned to office three years ago that in every budget they have taken something from families.

In their three budgets they have done some things which can be described as anti-family. I describe this as petty in the sense that it is a mean thing to do but it is by no means a petty thing when one considers the amount of money the Government get from it, £5.2 million in a full year. That is not a bad contribution to a stretched Exchequer. The married people at the lower end of the scale, single people and many people with families comprise 70 per cent of the people who will vote for a new wage agreement. The single people comprise over half of the total work force, if we take the married people at the lower end of the scale, under £8,000 a year, plus the family people who have had a swipe from Fianna Fáil for the third year running for having children.

Mr. O'Kennedy

My silence is out of courtesy.

Mr. P. Barry

I said in a petty way. The Minister has lowered the child allowance. We can take the Minister's silence as assent. If his strategy in the budget and in the Finance Bill was to get a climate in which a moderate wage agreement can be negotiated he has failed because the vast majority of the people who will be voting on such an agreement are in the category who will be most severely hit by inflation and who benefit from the changes in taxation in the budget.

The Minister repeated today that the changes in the budget will have an impact of less than 4 per cent on the consumer price index. He knows that the present assessment of what that figure will turn out to be, when it is published later on in the month, is over 6 per cent. I believe 6.2 per cent is the present assessment of what that figure will be. Why does the Minister keep trotting out 4 per cent as the figure for the effect of the budget, when it can be shown that it is 50 per cent more in a three month period? Up to the middle of last year the then Minister for Finance kept on repeating that there would be an end of year inflation rate of 5 per cent. The Minister for Economic Planning and Development, up until last July, said that the figure of 5 per cent might grow to 6 per cent. We all know that it turned out to be twice that amount.

When we consider what happened last year it is very hard to expect people to accept the Minister's figure of under 4 per cent when we know that the reality next month will show that the figure will be much greater. It will be difficult then for the Minister's credibility to stand up when he goes to negotiate a wage agreement. I accept his statement that it is first in our list of priorities at the moment. We are pricing ourselves not alone out of export markets, which includes the tourist market, but our home market is also threatened by imports. It is essential that we get our costs under control to ensure that our industries remain competitive, that we can complete in markets where we have to sell and also with those who are trying to sell in our market.

I would like to say something about the farmer's taxation in the budget. Most people agree that the farming community had not a successful year in 1979 and that as far as 1980 is concerned it will be a worse year for them. Despite this Fianna Fáil have decided to bring in a resource tax, which is a wealth tax under another name. They spent months contesting the wealth tax when the Coalition Government brought in a proposal for the taxation of capital. The resource tax, which Fianna Fáil are now bringing in, does not apply across the board to everybody with wealth but only to one narrow section of the community. Farmers are the only people being asked to pay this wealth tax, which they must pay whether or not they can afford it. They cannot deduct any borrowings they have made from their total wealth. Every single acre of land of those who are liable for this tax, whether it is profitable or not, no matter what their debts are, what sickness there is in their families or any other obligations they have, will be taxed under this wealth tax.

This resource tax will give the Minister £7 million this year, which is more than the wealth tax brought in. This is collected from a much narrower band of people. Anybody who listened to the arguments put forward by Fianna Fáil, when they were in Opposition, against the taxation of wealth and who thought they were sincere in those arguments about the effect on productivity and chasing capital out of the country, could well be excused for labelling them hypocrites now when they bring in this resource tax. There is no justification for bringing in a tax on wealth which applies to one section only of the community. There is no justification this year for further taxing farmers who will not have profits with which to pay that tax.

After the budget a very incensed farmer's lobby went to see the Taoiseach about this resource tax. They were told that this was only a temporary measure, that it was not intended to have it enforced for any length of time. I cannot see anything in the Finance Bill which puts a closing date on this. I presume, if the Minister follows through what the Taoiseach said about this, that it is only a temporary measure, that he will indicate on Committee Stage that this resource tax will only be collected for the tax year 1980-81. Section 25 states:

...being the year 1980-81 or any subsequent year of assessment...

I will certainly put down an amendment on Committee Stage to give the Minister a chance to write into the legislation that this is temporary.

The Finance Bill has also picked on farmers for special attention in the reduction of their free depreciation on machinery. I am not advocating that but I could not argue against restricting the amount of free depreciation if it were applied even-handed right across the board, but it has been confined to the farming community. That is why I said at the beginning that the Government appeared to operate in a very blinkered way. Last year it was common talk among the suppliers of machinery at the Spring Show that it was a very bad show and that they had sold very little farm machinery. Because farmers' income fell in 1979, they could not afford to buy new machinery in 1980, yet the Minister is going ahead with this proposition. The confirmation of this foolishness is that last week at the Spring Show the general view was that it was the worst show ever for the selling of farm machinery. The fact that farmers are being deprived of free depreciation and cannot write it off against their tax bill affects more than just the farmers. There will be redundancies in the big farm machinery firms as well as in small garages throughout the country. Because of this provision, the farmers are being encouraged to shelve plans to invest in new machinery when every other section of the community is being encouraged to re-equip and increase productivity. One farm machinery firm who have been mentioned in the papers are in serious financial difficulties and have given redundancy notice to their staff in the last month. Even with this background the Minister persists in not allowing the same level of depreciation to be charged by farmers against their profits as other industries are allowed.

In relation to the new 10 per cent rate for manufacturing companies, to operate from 1 January 1981 why did it take 18 months to surface in the House? What happened between the original announcement in Brussels or Berlin in the autumn of 1978 and the section now in the Finance Bill? We will have a chance to tease out the problems of that on Committee Stage.

There is a serious omission in the Finance Bill of any section that would remove the embarrassment to the banks and the scandal from the State of the level of tax that banks pay on their profits. The Minister has referred this to a commission, but I do not see why his officials could not devise a couple of sections for the Finance Bill that would remove this embarrassment. This is just a way of getting rid of the problem. A new section to deal with this in the Bill would not damage the method by which section 84 and the other incentives can be used by banks to attract industry. There are certain attractions in the way the banks operate the scheme in bringing industry here and one of the reasons why the 10 per cent rate had to be introduced was that as a result of pressure in the Community, we have had to discontinue our incentives for tax relief on exports to new companies setting up here from 1 January next. We can tease that out further on Committee Stage.

One thing that puzzles me is the exclusion of sales into intervention from the benefits of this tax. I can understand why they would be excluded under the export tax relief scheme. There must be some good reason for this because it seems to be so unfair that the processing of meat to go into intervention should make it impossible to avail of this new rate whereas meat processed for sale on the home market or directly on the export market would be able to benefit from this new rate.

The strategy behind the budget for what was known would be a difficult time should have been to keep the wage agreements down as low as possible, to keep the cost to industry of the budget as low as possible, to ensure that nothing would happen to increase the amount of redundancies and that we would maintain our competitiveness and our employment levels during this difficult time. The budget and the Finance Bill have not done that and the Minister does not need me to tell him about the damage being done to the economy by the budget.

The Confederation of Irish Industry normally keep their relations with the Government on a friendly basis and are slow to criticise, but they list the budget as one of the four principal reasons for the present spate of redundancies in industry. The imposition of additional operational taxes on industry in the recent budget increased industrial cost by 1 per cent on average but by much more for energy-intensive firms, according to the Confederation of Irish Industry newsletter of 6 May 1980. They also reckon in their newsletter of 25 March that the budget cost industry £45 million which would be sufficient to provide another 8,000 industrial jobs.

Speaking at the annual general meeting of what is perhaps the major company in the country the chairman said that the other oils tax will cost one of their subsidiaries in the north east £1.1 million per annum. This was equal to the amount of their wage bill per year, the implication being that if they did not have to pay this they would have the possibility of doubling their employment. The cost of the ESB of this other oils taxation—I am not talking about LPG tax or petrol tax—is over £11 million. That will have a shove-on effect on inflation as it comes through in the form of higher ESB charges and on industry in the form of higher energy charges.

The Minister and his colleagues, the Minister for Energy, may palm this off as being a conservation measure and we might buy that if other countries with whom we have to compete were doing the same thing. Then it would not interfere with the cost of our goods in relation to theirs. However, that is not happening. It is in this country that the cost effacts are felt which are making our goods less competitive in the markets in which we have to sell. Every industry will be affected because every industry is a user of electricity. It is another strut swept out from the competitive edge we have had for many years and another factor that will make it more difficult for us to maintain employment.

Already facts about employment are surfacing in the papers that make the outlook for the latter part of this year extremely daunting. In one fortnight up to 4 May over 1,000 people were made redundant or threatened with redundancy as a result of receivers put into companies. Redundancy figures are at the highest level for ten years except for one period in 1975. The Government will not bend in even the smallest degree to help industry, not even by the introduction of what they asked for many times in the last 12 months—a guarantee against the exchange risk if they borrow abroad. If we are determined, and I hope we are, to maintain our position within the EMS the bill for exchange risks for moneys borrowed in the EMS will not be picked up in a major way by the Government because there will not be the same exchange risk as if companies borrowed in sterling, dollars, or a currency outside the EMS. Due to high interest and inflation rates, many more firms are in serious trouble than those coming to public notice because they are bigger and are more in the public eye. Many small firms are in serious trouble because their costs are out of line and the money they have to borrow is costing too much.

The Government's answer to this is advertisements aimed at employers such as "Why pay a fine? Use the money to hire a personal assistant". "Work it out; a fine costs £20 a day". That is also a television advertisement announced in a heavy voice and threatening attitude—the same kind of threatening attitude adopted by the announcer telling one to pay one's television licence. Small business would not use £20 a day to hire a personal assistant because they are their own personal assistants. They are sick and tired of the amount of paper work they have to do on behalf of the Government. It also states that it is a very simple form and should be filled out and sent back with a P35. There is nothing simple about it. It may be simple for an accountant, a tax inspector or a member of the Department of Finance, but for a small firm employing six people it is not a simple form. Such a person should not be threatened with a fine of £20 a day. There are other ways of persuading people to comply with the law rather than by threatening them.

Besides big firms employing 360, 240 and 160 people—redundancies we see listed in the papers—there are many hundreds of other firms in serious trouble. I do not know whether they are notifying the Department or the Department of Industry, Commerce and Tourism of Fóir Teoranta. Concluding on the budget debate I said that £3 million allocated to Fóir Teoranta for 1980 would not be sufficient. I did not know, but the Minister must have known, that that would be wiped out in a loan to one company. I presume there are many other companies in the pipeline. Does the Minister propose to come in with a Supplementary Estimate for Fóir Teoranta to ensure that as many firms as possible will be kept in business? How quickly can he do that? Does it interfere with the operations of Fóir Teoranta that a Supplementary Estimate has not been introduced? Are they getting money from another source? If small firms are notifying the Minister about their problems he will know that high interest rates, inflation and increased costs under the PRSI are what most affect them. They make it impossible for them to keep a positive cash flow and finance the borrowings necessary for it.

The Minister should apply his mind to that immediately or there will be serious redundancies. They may not surface in the papers because they will be just small firms going out of business, never reaching the colums of newspapers but known locally. They will show up on the unemployment figures, which for three months running have risen, in less tax paid, and, before the end of the year, in the form of human misery unless the Government move quickly to rectify the position. That applies to the tourist industry which, for the second year, looks as if it will have an extremely difficult time. Last year the attitude of the Ministers for Posts and Telegraphs and Industry and Commerce was directly responsible for a poor tourist season. Their arrogant and head-in-the-sand attitude was responsible for ensuring that for the first time in seven years our tourist figures were down. The Minister can take credit if the same thing happens this year. If one talks to hoteliers, tourist officials or anyone on the western seaboard feeling the brunt of this, they will say that the major reason—there are others—for the cancellations is high prices, the cost of petrol, drink and cigarettes. You might not approve of them, but people do use them. These and the high level of VAT are the main causes of cancellations here at the moment.

I am reading between the lines here. Evidently Bord Fáilte's response is an extra promotional effort, worthwhile and correct, to try to make up what they obviously see, but will not admit, will be a poor season, to make up the numbers. The totally inadequate response of £150,000 will not make up the shortfall. I presume that the budget was already committed and they went to their own Minister or the Minister for Finance looking for extra funds to try to slow down the rate of cancellations for tourism or to boost the numbers coming here, were refused and had to scrape this inadequate amount out of their own resources.

I hope that they will be successful, that their efforts will bear fruit and will be able to arrest the decline in the numbers coming here and that the season will turn out well. However, the indications are not good and the Minister in charge of tourism knows that. Even at this late stage the Government should change their mind and give immediately to Bord Fáilte the extra funds needed to bring people in here.

There are other reasons for the decline, and the events of last autumn are held to blame in some quarters for the bookings not being as high this year. In the tourism industry generally it was expected in the very early part of this year that 1980 would be a better year than 1979. Therefore, that cannot be one of the reasons why they are now changing their minds. If you talk to hoteliers, transport people or tourist officials they will tell you that the reason is that prices here are too high. This can be laid directly at the door of the Minister here. Besides the increases he imposed in the budget on petrol, beer, cigarettes, wines, VAT and so on, we have the effect on inflation as a result of driving the prices of other things up as an outcome of the budget. I am afraid that that is the principal thing that will be remembered of this Minister, this budget and this Finance Bill, 1980, with the damaging effects on industry, jobs and tourism after it was introduced.

The rest of the points I will have to make will be on Committee Stage. I want to draw the attention of the House to one thing in order to show what a miserable state the finances of the country have reached. The duties on licences are to be increased under sections 70 and 71 of the Bill and they are listed in the Seventh Schedule from which I quote:

RAILWAY RESTAURANT CAR LICENCES

Licence to be taken out annually in respect of a railway restaurant car by the railway company or other person owning the car—£50.

The only payer of that in this country will be CIE. They are to be asked to pay increased licences and at the same time they will be looking for a subsidy of £50 million. It does not make sense, like a lot of other things related to the economy under this Government.

Mr. M. O'Leary

This discussion is to set the framework of decisions made in the budget in the Finance Bill before the House. It is interesting that the Minister, beyond simply outlining some of the provisions of the Finance Bill, confined the major part of his speech to a plea for moderation in pay expectations. Opinions will differ as to whether this Government and the Minister's budget have assisted materially in moderating wage claims this year. The objective facts are that today or tomorrow the authorities will be taking note of price increases for the June figure and there is no doubt that this third quarter CPI will be historically high and will mark a return on an annual basis to a 20 per cent rate of inflation. That is the quarter for the summer months and probably the figures will be published at the end of June.

Anyone who has experience of preparing the ground for wage negotiations of the character of the national understanding will know that a climate of high inflation is the least conducive to settlements that the public finances can live with. One has the impression that in this Government there is confusion on a co-ordinated approach to the entire question of how to deal with finances, especially the claims of the public pay sector. On Monday morning the Minister for Health was quick to accept the figures arrived at by the Labour Court, and of course that figure is to be discussed later this week. However, one is left with the impression that the Government generally are not clear as to what their overall economic approach should be at present. Since the demise of the Department of Economic Planning and Development one could say very fairly of this administration that there is no sign of any co-ordinated view emanating from the Government on the direction of the economy. They are deciding now over a stagnating economy, with growth down this year and high inflation in this third quarter around 20 per cent. It will take more than rhetorical pleas from the Minister for Finance to the unions to be moderate in their claims because the unions' negotiators will be returning very quickly in these discussions with the facts of economic life as they see them. They will be coming back to the Minister with the effects as they see them on the living standards of their members. The Minister may plead, and his advisers may affect not to understand that attitude of negotiation on the part of the union leaders. But anyone in the House with experience of dealing with this area will know that that will be the kind of discussions in which the Government will find themselves involved very shortly. In the event it is difficult to see the Government's expectations in the public pay sector for moderation in this area being realised as a result of these negotiations.

I was struck by the reference in the Minister's speech to the fact that, and I quote:

In this year's budget, I avoided taking more stringent action to close the gap in Government finances and in the balance of payments which would have been desirable in more favourable economic circumstances,...

Everything that has happened, and is happening, in the negotiations in the public sector leads me to believe that we will have an autumn budget. That inevitability becomes clearer every day. It is more and more an unavoidable policy option of this administration. I understood the Minister to say today that he would like this discussion to be broad-ranging but I do not propose to be broad-ranging.

Mr. O'Kennedy

I did not say that but if the Opposition want a broad-ranging discussion they can use the debate on this Bill as a vehicle for that.

Mr. P. Barry

We wanted a discussion on the White Paper but the Minister told us that we could broaden the discussion on the Finance Bill. We were told that we would not get a debate on the White Paper.

An Leas-Cheann Comhairle

That would be a matter for the Chair to decide because this Bill is a taxation measure and not a finance matter.

Mr. M. O'Leary

It seems more inevitable that the Government will have to correct certain errant policies in autumn and that worse trouble will pile up soon after. I am left with the impression of an administration indulging in "ad hocery" as a way of life. Departments seem to be making settlements and policy decisions as problems emerge in the daily press or as the actual disturbances reach proportions that require an instant solution whether from the Taoiseach or individual Ministers. I am left with an impression of an administration that are not clear about their overall policies. We, as observers on the outside, can see the kind of economy that is emerging, an economy which will give us a return to historically high inflation. At the start of this Dáil it was the proudest boast on the lips of economic Ministers that they had banished inflation. In fact, inflation was the invention of the previous administration, those wicked people who had the impudence to take over the seals of office for four-and-a-half years from the natural inheritors of Government here, the only true people who understand the secret of how the Irish economy runs. We are now seeing how these omniscient drivers manage our economy when given a 20-Member majority, as they enjoy at present. In the city of Cork, which is close to the electoral heart of the Minister for Labour, public transport is not operating. When he was in Opposition, a period during which the Department of Labour were notably interventionist in major disputes, he called for more intervention but in Cork public transport has ceased because of a one-man dispute.

Mr. P. Barry

Does the Deputy recall the boast of the Minister for Labour when in Opposition that he would settle any dispute inside 48 hours?

An Leas-Cheann Comhairle

The Deputy should permit Deputy O'Leary to make his own speech. He does not need any help.

Mr. M. O'Leary

I have great pity for any Member who holds that post. I do not wish to pillory the Ministry for Labour. It is as testing a Department as it is possible to have in Government. The Minister for Finance may be in competition with the Minister for Labour before the end of the year as to who has the most testing Department. For the sake of the political future of the Minister for Finance I hope he has his ejector seat ready for Brussels. If that ejector seat does not operate the luckless Minister for Finance will find himself holding a very risk-laden post and he will see that the high confidence reposed in him by the Taoiseach is not without its thorns. On a personal level I hope the Minister manages to beat a safe retreat to Brussels.

An Leas-Cheann Comhairle

There is not any section in the Bill which covers the future of the Minister for Finance.

Mr. M. O'Leary

I am attempting to be charitable to the Minister for Finance. I wish him well in that possible retreat that may be his before the end of the year. The problems that are mounting around him in the economy would suggest that that it is the best path for him to take, if it is available to him. Of course, there are other contenders for a similar route from the Cabinet. The administration, which had identified inflation in the economy as a congential weakness of Coalition administrations, something which followed the inherent wickedness, way wardness and unnatural nature of coalition governments, gave the impression that this had been banished from the land for ever. However, it is back in full vigour this summer at 20 per cent.

The Government are not putting forward any solution and today we have had four pages of an appeal by the Minister for Finance asking the unions to be moderate in their wage claims. The Minister will hear from the negotiators on the unions' side arguments based on such things as the effects his budget have had on the cost of living. The Minister may say that from his point of view the unions are unreasonable but that is the way people negotiate. Depending on one's viewpoint, people may appear unreasonable but that is the type of exercise involved in those negotiations.

What we are discussing here in terms of the effect on the economy and so on pales into relative insignificance when compared with the possible outcome of those negotiations later this month. It has not been realised sufficiently in recent years that the kind of discussions conducted by any administration centrally on wage bargaining, and on the broader concepts now involved in the national understanding, can lead to settlements which are much more under our own control and more important and decisive than anything done in a budget by a Government. Their importance has not been realised. We may be of the view that what we are discussing here is of central importance. Undoubtedly, what we do has great influence on the economy but success here can only be measured by equal success in the area of centralised wage bargaining. This year one may be forgiven for doubting that success will be easily attained, if by success one means wage levels within which the Government can live in terms of their budgetary plans. I doubt if that success will be attainable by negotiators this year particularly when one takes into account the broad scope of the kind of agreements that were entered into last year under the national understanding and which will be looked for, presumably, this year.

Later this month the trade unions will meet to discuss a motion empowering their leadership to enter further discussions but suggesting that the talks embrace things as diverse as education, health and the general taxation policy. In other words, we are talking about a full scale discussion with the Government on a wide range of policy outside the House. It is possible that people will be looking for results which Government Ministers may say are unattainable in the present economic circumstances. However, they will be testing negotiations and how we deal with the effects of the present recession, the type of stagnation that has come into our economy, the very poor growth rate we will record this year and the high rate of inflation, depends on their outcome. I am aware of how difficult it is to beat a path out of a high inflation situation, even in the context of world-wide recession. It is true that unemployment as yet has not shown the depths or heights one would expect at this time but there is the seasonal factor involved. However, I would not be surprised to see the unemployment rate this winter being in excess of 100,000, based on present trends in the economy. Several firms in Dublin, old established providers, have gone to the wall and were put in the hands of receivers because of the situation in the building industry.

I have, as I am sure other Deputies have, met representatives of such firms. One talks about "Strumpet City", which many viewers have seen on TV recently. The modern version of "Strumpet City" labour relations is men and women with their companies in the hands of receivers, in liquidation, themselves receiving notice of a few days or hours when their companies go to the wall. That has been the experience of too many in Dublin recently. That is the contemporary version of "Strumpet City". It would be a mistake to think that it is merely an evocation of history, of the problems that arise for employees. They have arisen in recent weeks in the manner I have described in many firms in the city. It looks as if that will not be the last of it as many other firms are in an equally perilous condition. The year 1980, it is no exaggeration to say, will be marked by many bankruptcies and a great deal of redundancy. One is not surprised that redundancy figures are rising very rapidly.

I do not pretend that all of this is caused solely by domestic factors, but undoubtedly the kind of management of the economy we have had and the decisions made since 1977 have contributed to the extent of the problems we now face. One does not need to go into recent history since 1977 but many steps have been taken retracing the policy area and we are now left with a Government strong only in its huge majority but really creaking with uncertainty about where it is going. One does not know whether the revision of constituencies is of more close concern to the administration than how to deal with the economy.

This administration takes its main policy document from the 1960 era, a period of high, automatic growth. All that was required in those days was the instilling of confidence and Fianna Fáil thought they had patent rights on that policy. It is more difficult now. They were out of office during the mid-seventies—luckily as many of them would think—but that was an important period in which to be in office if one were to be acquainted with the kind of problems the country will be facing until the end of the century. The old days of automatic growth are forever behind us. In 1973 we had more than a change of government—a change in the entire prospects of the economy. The era of cheap energy was over—too soon for us. The whole economic basis of government policy from then on changed. Giving in to opportunist opposition, Fianna Fáil succeeded with the electorate in ramming home the idea that what happened in 1973 was solely the fault of those in the National Coalition then, and that all that was necessary to make the good times return was the return of themselves to office. They were singularly successful. Saatchi and Saatchi, the advertising agents in Britain for Mrs. Thatcher's Government, were not as successful as Fianna Fáil were as a marvellously successful and ruthless Opposition, as we who were on the Government benches knew at the time. They stopped at nothing; no charge was too wild, no accusation too irresponsible. National agreements were coming up and one was attacked on the basis that the bargain proposed was not good enough.

The former Minister for Economic Planning and Development early in this Dáil chastised me personally, I recall, for the rather moderate level of the settlement in the 1977 National Agreement. Happy days—the Minister is not with us now on that level of authority to chastise us. We adhered to the old-fashioned view that in the economic sphere it is the chief national objective of a government to maximise employment. I still adhere to that view. We have heard often enough about national objectives in the political sphere and know how hollow the aspirations there are but the central economic aspiration of any responsible, patriotic Irish Government must be the maximisation of employment. Accepting that as my role in my area, I took it we were perfectly right to look for as reasonable a settlement as we could obtain. Anybody who has examined the matter, economists or others, would accept that the increased employment in 1977 and the recovery that took place in 1976, 1977 and 1978 in the economy was in no small measure due to the kind of bargaining that took place in talks with unions and employers.

It serves little, I suppose, to go back to historical alibis as regards what went wrong but I see as a great weakness of the present Government the fact that they are not accustomed to dealing with the problems of recession. They are still not acquainted with the new economic conditions which I think will govern the lifetimes of all governments and characterise the problems they face from now on. Things have changed in a remarkable way from the rather relaxed economic growth increase that came our way in the sixties. The choices before us are more difficult and the quality and courage of governments must be that much superior to that which obtained in easier times.

The Government have not convinced me that up to now they have fully understood these facts of economic life, especially when the Minister for Finance comes in here and thinks some kind of effect will follow from a four-page appeals to the unions. The present Minister for Finance must hold the record for appeals to the unions since he came into office. He is there a relatively short time but almost every weekend either on, as John Healy would call it, a talk show on Radio Éireann on Sunday or in between cumann meetings, we have appeals to unions to be moderate. Of course all sections of the community should try to be moderate in their expectations but it is difficult to see that conditions are properly created for such a situation when one looks at some of the actions of governments since 1977. They have not been directed towards creating the kind of climate in which moderate expectations could be entertained. Their general philosophy is totally different. It may have more to do with the fact that all of their thinking in the economic area is related to conditions that obtained in the sixties rather than the post-1973 high energy cost era.

I make the point more specifically in relation to the Finance Bill that while the reliefs given here in respect of mortgage interest, the concessions in the tax area to which this Bill gives effect, are very pleasant for those eligible to get them, one can think of more deserving tax categories for whom relief on a similar scale has not been given. I accept that the court decision made it incumbent on the Minister to act in this area but it is regrettable that exemptions given can quite as easily apply to loans of all kinds. The interest relief can be claimed even in respect of speculative loans. That will not impress those in the middle income groups who look at this concession.

There is a strong case to be made for assisting young married couples who are struggling to meet heavy repayments to building societies. This subsidy is across the board and will benefit many who are in no particular need of assistance from the public purse. Those whose incomes are greatest will receive the maximum benefit, and the scheme is not confined to interest payments on mortgages. If you have an interest bill because you bought a larger pleasure craft on the Shannon, there is no reason why you should not qualify for the concession given by the Minister. My criticism of this largesse on the part of the Minister is that it would be more desirable if exemptions of this kind were aimed more accurately at those in greater need. The increased tax relief means, in numerical terms, that a minority of taxpayers get further concessions, and the majority are not similarly dealt with.

It is sometimes forgotten that single people from about two-fifths of all PAYE wage earners and one could certainly make a strong case for an improvement in their position under the tax code. I am not clear how one-parent families will be treated under this tax provision. I will look more closely at this before Committee Stage. I am not clear whether such families are treated for tax purposes as if the head of the household were single. I do not claim that that is the correct position but, if it is, I will attempt on Committee Stage to put down amendments to rectify it. It is grand to assist people in purchasing their own homes but a strong case can be made that deductibility of interest payments against income tax could be restricted to mortgage interest payments only. It is inherently wrong to allow it to be cited for frivolous expenditure. Admittedly the banks have not been falling over themselves recently to give credit for frivolous purposes. I am not suggesting they have, but things could change over the next few months. They have not been rigorous in abiding by guidelines set up to now.

The Minister has referred to the anti-avoidance measures he has taken. I am not clear about this. There is a reduction to 10 per cent in corporation tax. I believe that, by means of leasing deals between these companies and the banks, the tax concessions given to companies in the Finance Bill will swell the banks' profits next year. I am not at all convinced that these concessions will lead to any increase in jobs in that area. On the concession to the corporate sector, the reduction to 10 per cent, the Minister has made the point that the suggestion that by means of leasing deals an unsavoury two-way traffic could be set up between the banks and the companies will be examined by the commission he is setting up to look into the whole field of taxation. From the very start the point has been made that the commission should not be used as a device to delay action in areas where the case has been made well and truly for action. In other words, the commission should not be seen as a stalling device. One does not know how long that commission will be examining these matters. I should like a more satisfactory reply from the Minister on this issue of the possibility of these tax concessions, far from being seen as a means to help companies in difficulties, leading to the kind of results I have suggested.

I have no doctrinaire opposition to assisting enterprises to maintain employment to the maximum level, but we need to be cautious about expending public moneys in areas where a possibility is not seen of a fair return in the form of extra jobs for any largesse given by Ministers for Finance. From a social point of view, where the taxpayers are at the giving end, any largesse and concessions should be seen to lead to increased jobs and maintenance of jobs rather than enhancing the profits of our financial instituations. It has not been shown whether leasing deals will be on the increase as a result of the tax concessions given.

There are great difficulties in the tourist industry. That was seen immediately after the budget. Those of us who commented on the budget identified that industry correctly as one which will be in bad trouble this year as a result of the changes brought about in the costs of many items. It is true that the tourist industry suffers because of difficulties in countries around us. No one would deny that, but we have contributed to making this a very high cost country from the tourist point of view. We must do our best to persuade as many as possible of our own citizens to holiday at home this year.

The tourist industry earns us a great deal of cash. It utilises a great deal of home resources in manpower, home produce, and so on. Quite properly it has been assisted by the national exchequer over the years. In the high season months, it is labour intensive. It is now facing what can be described without exaggeration as a crisis. In the city of Dublin the staffs of well-known hotels know they are facing a very lean season indeed. I do not know what can be done at a practical level at this point but the collapse of the tourist industry this summer is certain to add its quota of difficulties to our balance-of-payments situation this year.

Contrary to popular belief Opposition spokesmen do not take any satisfaction in difficulties facing the national economy. Regardless of what happens to the economy governments come and go. Perhaps they go more frequently when the economy goes into decline and our economy is inextricably on that path now. However, the general experience is that administrations remove themselves by their own actions. Unhappily, in our case the decisions of this administration have contributed to a high proportion of the economic problems facing us. I do not believe that as the months progress even the intervention of the Government in the taxation area—and the taxation problem was one which they did not deal with substantially from the moment of their return to office in 1977—has stemmed the indignation among the people. Undoubtedly, that indignation in so far as the tax area is concerned will increase during the year. The point has been made before now that in their actions in this area the Government have been very selective in their interventions and that is a point that is bound to be made again in the approaching talks. It will be said that the kind of concessions being made will favour the better-off sections, regardless of whether those concessions are being given from choice or otherwise.

This whole ramshackle of exemptions and allowances which has been built up without much thought should be changed. We would be better off taking just some of the better policies, though perhaps these are the ones with which the majority in the House would not agree. I am referring to Milton Friedman who has a concept of negative taxation, that is, of assisting those outside the current tax net by bringing their incomes up to a certain level. In other words, he is talking about a social wage. That is the direction in which we should move instead of continuing to patch up this ramshackle edifice of allowances and exemptions which defies all reason and which seems to be vastly unfair in the way it works out, seeming always to be assisting those who are not in the worst off categories and always missing the main point of reform. The kind of difficulties that this system gives rise to are the sort of difficulties that the Government will face in a few weeks' time in discussions with the unions. Failure in those talks to find settlements which this administration can live with would result in rather hideous decisions later but not that much later. If there are members of the Cabinet who believe that being in Government is the kind of happy release that it was during their previous tenure in the sixties, they have severe lessons in the offing. They will find that those shiny new cars that have been distributed to so many hopeful, first-time TDs, will be highly and most nervously earned. They will find that the electorates in the eighties, as in the seventies, are impatient of failure and are rather vindictive in the kind of punishment meted out to those whom they accuse of failure. They will be vindictive most of all to those whom they think have misled them.

That is a serious problem so far as this administration is concerned because too many of the electorate believe that the people opposite told lies and the way in which they told those lies was through their manifesto. Their problem is that that document propagated the idea that with a change of Government, the good days had returned forever. A former member of the House said often that wonderful things had happened in our time. All that was wonderful was packed into the manifesto but the electorate have shown and will continue to show in a very vindictive way their disillusionment with the promises made in that document. Regardless of what changes may be made in the Cabinet, regardless of which faces are changed for other faces, the stench of telling lies hangs over all of the Cabinet. Politically they have a short time to go before they are judged by the electorate.

An Leas-Cheann Comhairle

The Deputy knows very well that a charge of telling lies should not be made in the House.

Mr. M. O'Leary

I am confining this charge of telling lies to the covers of that document known as the Fianna Fáil manifesto but which I shall refer to as the book of lies.

An Leas-Cheann Comhairle

The Chair understood that the Deputy was making charges against members of the Cabinet. He must not make a charge of telling lies against any Member of the House. However, if the Deputy would return to the Bill before the House we could proceed.

Mr. M. O'Leary

I was endeavouring to comply with the instruction that our discussion was to be of a broad nature. That was the invitation extended to us by the people opposite and I did not wish to disappoint the Government by speaking, as I had intended originally, for just a few minutes on this Bill. The charge I am making is a political charge. I am talking about policy statements that were made in the manifesto and I am saying that the policies propagated in that document were lying policies. Therefore, the authors of that document must disprove this charge.

Mr. Keegan

On a point of order, what relevance has the manifesto to the Finance Bill?

Mr. P. Barry

There is no point in the Deputy trying to run away from that document.

Mr. Keegan

We have no intention of running away from our responsibilities.

An Leas-Cheann Comhairle

The Chair is trying to deal with the matter and has informed Deputy O'Leary that he is not even within the confines of the broad agreement before the House. He is certainly not in order in making charges of telling lies against identifiable people.

Mr. P. Barry

Nevertheless he seems to have touched a nerve or two.

An Leas-Cheann Comhairle

Is Deputy Barry making charges against the Chair?

Mr. P. Barry

Not at all. I am referring to the Deputies opposite.

An Leas-Cheann Comhairle

Perhaps Deputy O'Leary will return to the Bill before the House and thereby avoid this sort of problem.

Mr. M. O'Leary

I am sorry if anybody is annoyed by my describing their manifesto document in those terms. That document was not forgotten about in the election campaign. It was at the centre of the White Paper and the Green Paper on the economy that followed, and it has dominated budgetary policy up to now. Therefore, I do not consider it unfair throughout the lifetime of this administration to refer to the manifesto which in the main was responsible for the kind of victory that Fianna Fáil had in 1977. There appears to be an attempt to forget those policies, to consign them to the past, to suggest that there has been a departure from them. The recent White Paper marked that kind of departure. But what is the corporate policy, the Cabinet policy, now in the economic area? Following the preface to that recent White Paper one would be forgiven for some confusion in knowing what exactly is their policy.

The point I made at the outset is that they give the impression, as a Cabinet, of a group meeting problems from day to day. Perhaps a week is a long time in politics but when confronted with the range of problems now before the country, high prices, unemployment, bad industrial relations, subsisting solely on a policy diet of meeting problems on a day-to-day basis, attempting to run the country like a large press conference, is no substitute for consistent, long-term, well tried out or well thought out policies. Those are the kind of policies we need now—ones having a few years' span, ones which over the longer term allow for modification, so that we know what are our targets. There was a strong case made by the people opposite, in opposition, that plans were useful as a kind of exercise for governments in office in case they lost sight of the main landmarks of their policies. That is the danger now facing the people opposite—the regime of White Papers has gone with the Department of Economic Planning and Development, which is not being replaced by any alternative plan so that those of us looking at the Government's policy from the outside can say: here is the target of this Government in office. We have simply a reliance on day-to-day management, on the day-to-day coping with problems as they arise. Of course the horror is that in the approaching talks with the unions that kind of unpreparedness may result in lack of success. If there is that lack of success then I would suggest that not alone the Government but the entire country will be facing even more troublesome times.

At any rate we shall have an opportunity on the remaining Stages of this Bill to deal in greater detail with some of the points I have made.

Mr. Hegarty

In the course of his introductory remarks the Minister said:

We are now moving towards the next phase of wage negotiations and I sincerely hope that discussions can get underway without delay and be concluded successfully. I must emphasise again the absolute need for moderate increases in pay.

Surely this is something new and different from what was preached by the party opposite when in opposition.

An Leas-Cheann Comhairle

Lest there by any trouble later, the Deputy will appreciate that he has 45 minutes only, as has every other Deputy in the debate in accordance with the decision of the House.

Mr. Hegarty

Probably that has put us in our present position, more so than the removal of car tax, rates and a lot of other decisions taken by this Government. The main reason for the problems now confronting us was the fact that, in the run-up to the last general election, the party opposite raised people's expectations far higher than the country could sustain. That was the most serious mistake made by the party opposite. When in Government during a difficult period our Minister for Finance of the time, Deputy Richie Ryan, worked very carefully on the economy. Indeed Senator Kenneth Whitaker, when speaking on this matter, pointed out that those policies pursued by the Coalition seemed now to have been the right ones.

Had the electorate shown more wisdom at the time they would have realised that one cannot deliver fresh strawberries in December, that such promises are not on, nor were they ever. For instance, in my constituency there was brilliant canvassing undertaken by Fianna Fáil at the time, when they told the farming community that under a Fianna Fáil Government—once these socialists were out of the way—the taxation burden would be relieved and all would be well: get rid of Richie Ryan; get rid of this outfit and we will look after you. Unfortunately we have seen what has happened; they have now scraped the bottom of the barrel; they have got rid of rates relief down to the very smallest farmer; the Minister in question had the audacity in this House to call the Bill a Rates Relief Bill, when the only relief it gave was to Fianna Fáil and the Government. Certainly it did not afford unfortunate farmers any relief. In deed one could correctly describe that as a fairy tale, like a lot of others about which we have been hearing. Some people legislating on the benches opposite would put Hans Andersen in the shade when telling fairy tales.

Now we are being told that the imposition of the resources tax is temporary only based on, of all things, the Griffith valuation. It is as well to point out that in my part of the country there can be found, side by side, a farm of 70 acres with a £140 valuation and another, without any great difference in soil or anything else, of 140 acres with a £70 valuation. That illustrates how unfair is anything based on the Griffith valuation. In a year not shaping up very well for the farming community it is a pity that we should be endeavouring to put this extra burden on them. I believe the Government would gain a lot more at present by giving some encouragement to the farming community. I would have hoped that, in the present difficult climate of agriculture, a wise Government and Minister for Finance would have seen their way to helping the farmers who are now experiencing extreme financial difficulties. In my area already we have had some very fine farms coming on to the market because of financial difficulties. This is indeed very frightening.

We have a credit squeeze brought on basically by mismanagement. As I have said before, the government of the day inherited five talents. They have now squandered four in honouring some of their promises and have buried the fifth, because that is precisely what they have done with the £—it is buried, locked up where nobody can get at it. The Government must be made realise that a stagnant agriculture will spread stagnation right across the board, to the industries based on agriculture, processing, transport and so on and massive exports—all of which are dependent on the farmer being in a sound financial position and having enough money to expand, invest and purchase the wherewithal to produce good crops. You have only to read the farming journals or visit the Spring Show to witness gloom. Some wise person at the show summed it up by saying that, as far as farm machinery sales were concerned, for the first time they sold welding rods. The farmers are driven to trying to repair old equipment because of the Government's tax policy of not allowing normal depreciation on farming equipment, which would be allowed in any other business.

In this House the Minister for the Environment was asked what discussions he had had with his colleagues in the Departments of Finance and Agriculture with a view to comparing the farm taxation position here with that in the countries against which we are competing on the European market. His amazing reply was that he did not know, nor apparently had he had any discussions with the Cabinet on this very important matter. That proves that this Government are not concerned about comparisons between our farmers and their European colleagues, or how ours would fare in the market place. All that they are concerned with is trying to glean the last few pounds from an industry which is in dire straits. In no other situation is a Government imposing a predetermined tax without taking into consideration ability to pay.

On the industrial scene, the policy of the present administration has landed us in severe difficulties. All over Ireland we have industries on a three-day week. As late as this weekend we have another industry, Seafield Fabrics in Youghal, closed down again—and not a word about this. Verholme Dockyard are still awaiting the order for the two naval vessels promised so many times by Fianna Fáil Ministers and Fianna Fáil Deputies. When we were in office those very people were responsible for bringing the workforce of that industry on to the streets of Cork clamouring for more ships, at a time when there was full employment. I appeal to the present Minister for Labour and his colleagues to do what is right for Verholme Dockyard—not to bring them out on to the streets, which serves no purpose, but to ensure that his colleague, the Minister for Defence, puts the order in immediately before it is too late.

I ask my fellow Corkman, the Minister for Labour, to visit Youghal to see what he can do to salvage that industry which has given such good and solid employment over so many years. The difficulties in the textile industry are bound to be of a temporary nature. These industries will survive, given a chance. The money does not seem to be there, nor the will. I appeal to the Government—a Government which have not been shy to borrow, probably for all the wrong things and which are now very short of money—that, wherever they find it, this money will be found to save the existing industries. There is no point in continually building industrial estates.

Attention must be devoted, firstly, to ensuring that the existing industries are kept in full production and, secondly, that the industries that do come are given every opportunity to survive. We hear a lot of talk about natural gas grids here and grids there. Surely the first priority for the present Government, now that natural gas is assured, would be to connect up to every existing industry and on to every industrial site in the harbour so that industries are encouraged to come? New industrialists are not at all happy with our present energy situation. All we are given at the moment is a negative approach—a negative approach to agriculture, to industry, to tourism, to housing.

Our roads at present are a prime matter of fun on RTE. Their programmes talk about the "Ministry of Potholes". At one time potholing had to do with caves, but it has now taken on a new dimension. Potholing now is going on to the road and trying to avoid the potholes. At a recent county council meeting I had to describe our roads as minefields. That is what they are. Any garage will tell you that they are hard put trying to keep cars in repair because of the conditions of our roads—and this from a party which in 1977 promised to get the country moving again. Go bhfóire Dia orainn. If that is what is getting the country moving, well, I do not know.

I am convinced that the people who have been conned by the promises given in 1977 will react, and pretty violently, when they get the opportunity—and they have been given a few. Our young people are looking to the political parties for leadership and for integrity. They look to us to provide them with jobs, homes and a future. That should be the first priority of any Government. Instead Fianna Fáil squandered the money that could have been used to establish industries, to build more houses and better roads and to make this nation an attractive place in which to live. In my local authority area we have a situation at the moment where we have 13 houses and 120 applicants. That is what has happened to our housing programme. With much diffcculty we got an operation going where serviced sites were offered to people at about £4,000 with a £9,000 loan. Everything was ready when we were told about the £12,000 loan. However, with inflation and rising costs the people concerned are much worse off now than they were prior to the increase in the loan. I hope the Minister will look into this matter.

Deputy Barry mentioned that 1979 was a bad year for tourism and, quite rightly, he laid the blame on the Ministers for Posts and Telegraphs and Energy. Hoteliers, especially those in seaside and country areas, have been working very hard for the past few years to develop their premises, but now they are in grave difficulty. I appeal to the Minister to ensure that Bord Fáilte pay grants promptly. Sufficient funds should be given to the board to promote tourism more vigorously. We are now in competition with high-powered overseas salesman in the tourist industry. At last the Americans have grasped the idea that tourism can be big business. The continentals have always been professionals in this area. The one thing we had—namely, providing holidays at the right price—is gone. We are now as expensive as anywhere else in Europe or America. As Deputy Barry pointed out, we need to mount a more vigorous attack on the tourist market.

It is necessary for us to spend a considerable amount of money on our roads. Basically tourists do not confine themselves to main roads. Central funds should be made available to local authorities to put our roads in good condition. I should also like to see money available for improving amenities at our beaches, such as the provision of water supply and toilet facilities. In order to help the less well off people, caravan parks near beaches should be constructed by local authorities and this should be financed by central funds.

The Government should be giving serious consideration to the great problem of pollution. They have given lip service to this matter but have done very little. We hear much about Lough Sheelin and our other rivers but the local authorities themselves are the greatest polluters when they insist on dumping raw sewage into the estuaries. As I said in another place, this has happened throughout the centuries but people did not know any better then. We do not have that excuse now.

We should make an effort to clear up our harbours. Many visitors get their first impression as they travel by boat to this country and that impression lasts. If they see a filthy harbour they will not have a good impression of our waterways. The British Government had to spend considerable amounts of money on cleaning up the Thames and the Mersey. We can move before it is too late, but we must do it now. All of these projects, such as pollution control, improvement of roadways and the provision of housing, will create worthwhile employment. There will be a spin-off from such employment. It will not be employment just for the sake of employment, which is something the Government have concerntrated on.

There is a bright future for the country if we have the right attitude. That should be a fighting attitude on the part of the Government. Agriculture should be given pride of place. The farmers are now in grave difficulty and they should be given help. Some of them may have borrowed too heavily but they did not bargain for a 20 per cent interest rate. They borrowed at 11 per cent or 12 per cent but now when the investment is made their repayments have almost doubled. We should help them because the formula is there. Most of the farmers are in the development category. Certain categories of people who are eligible for local authority loans get money at subsidised rates. Whether through the ACC or the commercial banks, subsidised loans should be made available immediately to farmers in this category who have borrowed heavily and, as it has transpired, beyond their means.

More thought should be given by us to processing what we produce. For far too long we have exported live animals. I see a great future in expanding the processing of beef and the further processing of dairy products. We should work hard at marketing those products. The EEC tell us that we have contributed to the butter mountain and the very considerable quantities of milk in the EEC. We have never done that and it should be made quite clear to them. Everything produced in this country has been marketed and sold. The leaders in Bord Bainne, Erin Foods and Mitchelstown tell us they can sell a lot more if they get the encouragement and the impetus. The stop-go attitude of the Government is not helping those people. The Government's approach to taxation is not helping farmers, because they feel the harder they work the more they will be caught for. They are all wondering what is the next tax the Government will impose.

Farmers have said that they should be taxed the same as any other business organisation, on their accounts, and that they should be given proper depreciation, as is normal in any other country in Europe. This means that rates will have to go. We are competing with people across the Border who have to pay income tax but do not pay rates. Our farmers cannot compete in the French market place if we have a higher taxation system than the French have. A lot more could be gained by a positive approach to agriculture rather than the negative approach being adopted by the Government. Our present difficulties in relation to oversea investments and the closing by multi-nationals of some of their small outlets could be overcome if we paid more attention to industries based on our raw materials. There are many Irish entrepreneurs around. There are many young Irish people who should be given encouragement so that we can lick the Japanese and the Germans. A small farmer in my locality started up a farm machinery business but because of the obstacles put in his way he could not qualify for a grant.

We will have to help our own people first. If some of our young people come forward with bright ideas we should do something about it. I made a suggestion some years ago—a suggestion which has not been acted on by the Coalition Government or by the Fianna Fáil Government—that there should be a substantial prize given every year to the person with the best idea for some new industry. This would create jobs for our people. We have seen recently that small industries are much more useful in an economy than multi-nationals. The chance of survival in a recession for small industries is much greater than the large industries, because the small industries have not big overheads.

I am glad to note that the IDA in their advance factory programme are now building smaller units. A number of new industries which have been created are doing very well. I would like to see more of this type of operation. Both sides of the House will have to work together in the interests of the country. The Opposition can be as critical as they want of the Government party but at the same time they would like to co-operate with the Government in helping industries which are doing badly. The textile industry in Youghal is doing very badly at the moment. I am prepared to offer my services at any time to do everything possible to keep those people in employment. There is one industry there on a three-day week. Those people have told me that it is a soul-destroying experience, that the tendency is to go to the pub and that people get out of the routine of a week's work. We will have to avoid this. I believe that the textile industry is going through a temporary recession. Textiles will always be needed.

What is happening in the EEC in relation to the textile industry? What are our Ministers doing to ensure that there is an end to the importation of cheap goods from far away places? We find a man with an office, a secretary and a telex machine flooding our market with goods from Taiwan and other distant places. What is the point of being in the EEC? Who is talking about rules and regulations? Where is the book of rules of the Treaty of Rome if this is allowed to happen? Our first priority should be to protect ourselves. What advantage is there in offering cheap shoes and cheap clothes to somebody here if this puts a lot of our people out of employment? We can talk about exports of farming products but I believe the future for Irish farming is on the home market. What is the point of producing good food at the right price if people cannot buy it at the right price? Does France allow in goods from Taiwan and those other places? Those of us who visit France know that they only drive French motor cars. Have they found a way to keep out the other motor cars?

As far as agriculture is concerned, the Finance Bill has very little to offer. It just means that more people will now be paying rates and taxes. It means more people will be paying resource tax, which, as Deputy Barry pointed out, is another form of wealth tax. In a year when our thoughts should be turning towards injecting capital into industry it is not good to see fertilisers stacking up in our co-operatives, it is not good to see essential pieces of farm equipment left over with the farm machinery people and it is not good to see dairy herds going into the meat factories. It is frightening to see young farmers putting their farms on the market. They are not doing that out of choice and it should be stopped immediately. I have given the Minister some ideas as to how that should be done.

If the present high interest rates continue we will have complete stagnation, which will also hurt the lending institutions. The flow of money will stop and these institutions will have money nobody will be able to afford to borrow. They will have problems with their customers who have borrowed but are unable to repay because of the savage interest rates. This is an internal decision by the Central Bank. Surely they could look abroad at what some of our colleagues are doing. If we must have a credit squeeze why not have a discretionary type of credit squeeze as they have in Europe where the local bank manager decides whether or not a customer's proposal is viable? If a man is borrowing for a second Toyota car he will not get the money, but if he is borrowing to buy an addition to his dairy herd he will get the money. The interest rates in Germany are at 8 or 10 per cent and they can lick anybody at the moment, even the Japanese. So could we, but not at 20 per cent and not with stagnation in agriculture, three-day weeks and the closing down of industry. These industries cost too much in blood, sweat and tears. Let us not let them go now because the machines will not be worth twopence in a month's time, because there will be no way to get these machines back to work. I appeal to the Government to act quickly. The Government promised to get the country moving again. They had better do it, and do it quickly.

Mr. Keegan

Listening to Deputy Hegarty speaking one would think that all our problems could be laid at the feet of the Fianna Fáil Government and of the Fianna Fáil Party. That is not the case. This Bill gives us an opportunity to deal in detail with the provisions of the budget. The budget was introduced at a time of world recession. We are not alone in our difficulties. Even the advanced countries that Deputy Hegarty spoke about have problems of high inflation and very high and alarming unemployment rates.

We would do well to examine the cause of the problems. An economic crisis has been created by the oil producing countries. We are a nation on the periphery of Europe and as such we are highly dependent on imported energy. By tradition we have imported oil because it was cheaper to purchase oil abroad than to develop our own sources of energy which we have in abundance and which we are now seeking to develop. The oil producing countries realised the value of their product and increased the price of oil. This affected other countries as well as us but because we are a small economy we were less able to bear this increase. We have many problems and it will be a long time before we are in the same position as the countries on the European mainland who are much older nations. We are a young nation by European standards and being an island nation it will always be more costly for us to trade with other nations. That is one reason why we must make every possible effort to remain competitive.

When people make high demands which the country cannot afford we should ask ourselves if these people realise the situation, if they are prepared to talk in the Irish context, or do they imagine that the nations of the world will dance to the tune they call? Many of our problems arise because people do not pause to think. People in responsible positions will not ask themselves how they can make a better contribution to the economy or if they can contribute more to ensure that we enjoy a greater share of the world's wealth. We cannot share that wealth by being unreasonable, by making excessive demands, knowing full well that these demands can only be met at the expense of unemployment among the other sections or among our fellow workers. All of these problems must be considered in the context of the Finance Bill and its implications for the public.

The Opposition Deputies talked about the 1977 manifesto. All the speeches today from the Opposition benches were based on the Fianna Fáil election manifesto, which has no bearing on a Finance Bill. It seems that they have nothing else to talk about and they cannot put forward their own plans or alternatives. I would like some of the Opposition speakers to tell us how to improve our living standards, how to gain better markets abroad and how to create more jobs. I have not heard anybody from the Opposition benches make any suggestion about improving our economy along those lines. A few years ago they were reckoned to be the men of all talents with the superior intelligence, the men who had the answers to all our economic ills. The got their chance from 1973 to 1977 and then the people decided to reject them, and not because of the Fianna Fáil manifesto. The Opposition parties had an equal opportunity, in fact they had more than an equal opportunity in 1977 of getting their message across to the Irish people. They get an excessive media coverage which we in Fianna Fáil have never seemed to be able to enjoy.

The people made their own decision and elected a Fianna Fáil Government because they believed that a responsible Government was the only kind that would steer the country through the years of economic difficulty. It is unfortunate that we do not have a responsible Opposition. I hope that the time will come when the Opposition will act in a responsible manner and tell the people what their alternatives are to the problems we face. We hear nothing about these alternatives. There is an old proverb about the man on the ditch always being the best hurler. He can see all the mistakes the player is making on the field but if he were on the pitch himself he might not be able to play so well.

The Opposition should ask themselves what can be done to improve the economic life of the people. What can they do to create the thousands of jobs needed today? They can co-operate with the Government, as can the trade union movement, in their efforts to maintain the industries we have and ensure that we attract more and more industry to our shores. That is where we are falling down today. We have a bad reputation abroad as a workforce that foreign industrialists can have confidence in. It is tarnished by our high strikes record. In the past strikes were caused by workers demanding high pay. Now we have more and more inter-union disputes which will wreck industrial advancement made over the years. If the Opposition want to make the real contribution that Deputy Hegarty spoke about they should get together and co-operate with the Government in their efforts to have industrial peace. That is the curse of this decade. If we fail to achieve industrial peace we have little hope of surviving as an independent nation and a member of the EEC.

Efforts were made in the budget and in this Bill to ensure that we would make reasonable progress this decade. In order to have reasonable progress we must first have an equitable system of taxation. We must ensure that every citizen pays his fair share. This Bill sets out to ensure that everyone makes a fair contribution in order to achieve the economic targets being set by the Government which, hopefully, they will succeed with.

I regard this Bill as a positive effort towards ensuring equity among all sections of the community. I do not like to see new measures of taxation imposed on farmers because 1979 was a disastrous year for agriculture. This year looks to be a more promising one and if farmers make a profit they will be called upon to contribute their fair share to the Exchequer. A great deal has been said about the inability of the farming community to pay. We know that if a farmer makes a loss he will not have to pay any tax. He will enjoy the same concessions as every other section of the community and this seems to be something the Opposition forget when they talk about taxation for the farmer. He will qualify for interest on land in the same way as the PAYE worker, for plant and machinery and for family allowances. Grave damage is done to the agricultural industry by the statements of the Opposition parties. They are endeavouring to kill off farmer confidence.

Agriculture is our greatest single industry and everything that can be done must be done to ensure that its full potential is reached and surpassed in the eighties. We were fortunate to succeed in our entry into Europe where new markets are available. We realise that among the massive population of Europe there is a hardening of attitudes towards paying higher food prices. If the farming community hope to improve their living standards they can only do so by higher productivity and greater efficiency in their farming enterprises. They are well equipped to achieve that. If the right incentives are given and the right economic climate created they will respond in the way they have been expected to through the years. The bonanza days are over. People all over Europe are determined to secure food at the lowest possible price. That is one reason why it has taken such a long time to hammer out an agreement among the European Ministers and our Minister in regard to farm prices for 1980.

Our taxation system must be geared to ensure that maximum production and fair play and equity will prevail. There will always be disgruntled people who will object to the idea of fair play. Unfortunately, we have too many greedy people who want to grab the whole cake and are not satisfied to leave any portion for other sections. The Government must exercise their full authority to ensure that everyone in a position to pay pays their full share. With regard to farming taxation, farmers will not be obliged to pay any tax if they are not making a profit. That is not clearly understood by them. A certain amount of blame must be laid on agricultural journalists and others who have endeavoured to shield the real effects from the farming community. I hope commonsense will prevail and that farmers will be in a position to maintain their rightful place in society. I know they want to play their full role in ensuring that our balance of payments situation is improved because there is no section of the community better equipped to increase exports than the farming section.

I am more than pleased with the efforts of semi-State organisations to secure markets outside Europe. I am delighted with the success Bord Bainne are having in the Middle East. These countries are becoming the new rich of 1980 and enjoying a measure of wealth they never dreamt of in the past. All credit must be given to semi-State bodies who have succeeded in getting a grip on markets available for Irish produce. Let us hope that other industries will follow the good example set by our semi-State and agricultural industries. In that way they are helping to earn more and more capital for this country which we need if we are to improve our balance of payments position.

I want to deal for a few moments with the serious situation in regard to our balance of payments which has been brought about by our over-dependence on imported goods. It hurts me to see the amount of foreign goods being sold in this country at present. Most disturbing is the fact that our supermarkets are bursting at the seams with imported goods. Despite our being one of the greatest agricultural countries in Europe, we have a system being perfected and put into practice here by the multinationals whereby they buy their stuff in bulk in other countries and have it brought by land and sea and distributed to the shelves of supermarkets throughout the country.

The trade union movement would be well advised to take that in hand and in that way they would be acting responsibly and playing their part in the economic progress of this country. There is no doubt that we have first quality food in this country produced in a reasonably satisfactory climate. If it was not an excellent product we would not be succeeding as we are in other countries throughout the world.

Therefore, I say to the trade union movement, the Irish Housewives' Association and other organisations involved with consumer products that they should be more wary of the type of products being made available to us and try to buy Irish. If you buy Irish you are helping to stabilise the workforce here. Not only that, you are helping to create thousands of new jobs. We must all remember that if we continue to rely on imported goods there is little hope of success in the job creation efforts in which the Government are so determined. I say to every section of the community, buy Irish in so far as it is humanly possible and in that way we will all be making our contribution to the country. Deputy Hegarty was right when he said that he does not see the French driving anything but French cars. That is true. They do not eat anything but French-produced food or drink, anything but French-produced wine. That is nationalism at its best and we lack it in Ireland. I hope the rule of commonsense will prevail and that all Irish people will become more patriotic and give better support to the "Buy Irish" campaign. Then this country will be saved £ millions, our balance of payments situation will improve steadily and a higher living standard for all our people can be achieved.

Regarding agriculture, we must bear in mind that the agricultural industry in recent years has been over-dependent on imports of foreign goods and machinery. We would do well to implement the practice of farmers in other countries and try to cut down on imports of very expendive machinery. We see £ millions worth of farm machinery underused throughout this country at present. All those pieces of equipment have been purchased at a very high cost and some of them are used for one, two or three weeks in the year. Take the case of the combine harvester lying idle for 11 months of the year and the same applies to the forage harvester, mower, plough, tillers and all the other bits and pieces of equipment, and they are all imported. Ten years ago we had Irish agricultural machinery industries flourishing here but, unfortunately, they began to feel the pinch from the imports of foreign machinery. High-powered advertising was to some extent responsible. I hope that farm leaders will now see the need to advice farmers to concentrate more and more on a system of co-operation and lease lending in preference to continuing to purchase more and more foreign machinery at a very high cost to themselves and to the country.

The credit squeeze was mentioned by previous speakers. In the past the banks were too liberal in loaning out £ millions to farmers to enable them to purchase new farm equipment and additional parcels of land. In the last few years land prices in Ireland have borne no relation whatsoever to the productive capacity of the land. We should all be glad that land prices are now coming back to the European level. That situation is long overdue because the indebtedness of our farmers is a source of all the unease that has arisen among them. They borrowed heavily and the banks were there encouraging them to borrow. They were prepared to finance two farmers to bid for the one parcel of land. Now, when the credit squeeze is in operation, they are prepared to put some of those farms on the market. Therefore, new thinking and new policies are required by our financial institutions. Let us hope that this year and successive years will see a change in that direction.

Every section of the community will welcome the tax concessions which have been granted to those who found it necessary to avail of home loans in recent years. That is a real concession. I regard the building industry as very important to our economy because it makes full use of our own resources and it is also a wonderful source of employment. Every effort must be made to ensure that the building industry is assisted in every way possible. It has given worthwhile employment to this country. I hope that the housing drive will not suffer this year because of the high cost of finance and all the difficulties associated with the building industry. If we have the co-operation of all sections of the community and realism in wage demands in 1980 we will succeed in maintaining economic growth in this year as we did in the past. Bearing in mind that we have had some remarkable successes ineconomic growth, if the Irish people give their full support and their loyalty to the best efforts of the Irish Government, then further successes can be achieved in the coming years.

Other speakers have mentioned the enormous problems facing local authorities and have referred to the lack of local authority finance. There is no doubt that at a time of economic stringencies and a tightening of credit all sections of the community suffer. Local authorities may not be getting as much money as they would like in 1980, but it should be remembered that this is not the first time this has happened. On the two previous occasions that local authorities were told to cut back on their expenditure Coalition Governments were in power. What we are experiencing now is not new in Irish society. We have had recessions in the past, but hopefully we will ride this storm and the nation will move forward to greater things in the future.

A lot of people talk glibly about potholes and by-roads but they must bear in mind that those matters will be resolved. A start should be made in the capital city. I find it difficult to understand why Dublin Corporation have not yet decided on the route for the national motorway. If that local authority make a start other will respond quickly. It is important that our negotiators in Brussels get the maximum amount of money from the regional fund and other Community sources so that we can embark upon road improvement schemes. The increase in heavy vehicular traffic has played havoc with our roads and that is partly due to the great industrial progress that has taken place. Many visitors are amazed at the economic progress we have achieved. Our economy has been progressing in spite of enormous difficulties down the years, but if we are to continue to expand we must have an improved roads network. I hope that those sections of our community who make great efforts to impede progress by their attitude to land acquisition and so on realise that they are damaging the national economy, something we cannot continue to tolerate. We must have complete involvement by all sections of the community if we are to make the progress we want. We are becoming a more selfish and greedy society daily. We expect too much too quickly. If our expectations are high our input to the nation should be high also. It is very disturbing to see some sections of the community demanding, and getting, more than their fair share at the expense of weaker sections.

A real effort was made in the budget to improve the lot of the weaker sections, old age pensioners, window and orphans, people who depend on social welfare. Those who make excessive wage demands should remember that they are damaging the lot of the poorer sections of our community if their demands are beyond their productive capacity. When those people succeed in their claims they deprive the weaker sections of the community. Government action must be firmly geared towards improving the lot of those people who do not have the same type of bargaining power or muscle that is available to others. We must realise that we all have a role to play. When we refer to the creation of more jobs we must realise that we are all involved in that drive. If we want more manufacturing jobs and more industries we must ensure that we are able to produce something that will be competitive on all markets. We must bear in mind that we cannot produce commodities unless we have a sure market for them. We want to see all our young people employed and our industrial arm strengthened, and for that reason greater trade union responsibility is called for. The trade union movement has a vital role to play in our society and they should not allow themselves to be ruled by a minority of members. The Irish Congress of Trade Unions, or the trade union leaders, are not the cause of unofficial strikes. Those strikes are caused by a few wicked, mischievous and evil people who are determined to create trouble for their trade unions and the country as a whole.

We have a duty and an obligation to ensure that those disturbing elements in our society are not allowed to succeed in their efforts to wreck our economy. If we are to survive we must remain competitive and, therefore, we cannot set our targets too high. If we want to maintain our competitive position in the European market we must be able to produce goods as cheaply as the Germans, the French and the Japanese. The Japanese are successful because their workers are determined to produce more. I have read of Japanese workers declining to take their holidays in order to help the national economy. That is the type of enthusiasm we would welcome here. If we had greater industrial stability we could achieve real progress and this would be a happier country to live in. This Bill has gone some of the way towards laying the foundations of real and definite progress in the decade ahead.

Mr. F. O'Brien

The Minister in the opening paragraph of his speech mentioned income splitting and then told us that he sought to achieve an income tax system which would improve the position of those on lower incomes. If one examines the facts since this Government have taken over, the lower income group have not got any protection. The manifesto did not do anything for that group. If you take the budget tax concessions, coupled with the existing inflation rate, and do a simple sum there will be a minus quantity at the end. I hope the Government are not trying to delude anybody into thinking he will be better off. Anybody in the higher income group will benefit possibly by the tax concessions but not anybody in the lower income group. To say that people are being protected is less than honest and in keeping with the Government's attitude to people at that level of income. They are just taken for granted.

The Minister said that the most significant development from the taxation viewpoint was the introduction of income splitting which he said was "a radical improvement which goes way beyond the requirements of the Supreme Court's decision". That is indeed making a virtue of necessity. The Government had no say in the income splitting operation; that was decided by the courts. Yet we are told that this is a radical improvement. It was a radical improvement imposed by the courts on the Government. Any other radical improvement that has taken place in the past couple of years was also imposed by the law. Let us not be too enthusiastic about the Government suddenly becoming radical. I wish they would; we might see some activity by them. No, they are a Government that will only respond to events as they occur.

The Minister spoke of the next phase of wage negotiations and said:

I sincerely hope that discussions can get under way without delay and be concluded successfully. I must emphasise again the absolute need for moderate increase in pay. All progress is undermined if we pay ourselves inordinate wage increases.

He says nothing about inordinate price increases. My colleague here will spend some time from 7 o'clock on this subject, but there is no use in the Minister exhorting workers here to accept low income increase while there is no control whatever on prices. We do not have to wait for them to happen. Today we read that the ESB will possibly be increasing electricity by 10 per cent in the next couple of months. We now get the bad news in advance and we can expect it all the time, but the Minister comes here and exhorts all in a nice pious way to moderate demands.

The Minister goes on to talk about the 7 per cent increase in Sweden and how wage increases in the other EMS countries are very much below ours. Of course they are because their price increases are way below ours. I believe we are not maintaining our standard of living as price increases are going at present. I suppose a Minister for Finance is entitled to lecture here from time to time but he must also come down fairly on the question of prices and must adopt a positive policy to keep down the present drastic rate of inflation. Then, no doubt, we will have sanity in wage increases. But there is no point in asking the workers or the trade union movement or both to accept a lower standard of living particularly when less than three years ago they were being told that if the present Government were elected everything in the garden would be rosy, that they would solve the problems, that if you needed something the Government would give it to you. The people bought that package and found they were deluded. Now they are being lectured and told to be modest having been conned into voting for a dishonest Government.

Unless the Government take their economic and social responsibilities seriously we cannot hope to get the required response. There was an element of trade union bashing by the previous speaker to which I shall return later, but as regards the trade union movement and national wage agreements and the national understanding, the trade union movement was very responsible and had the best interests of the country at heart when negotiating increases. They were aware that if the increases were too high they might create unemployment or hit the economy. They behaved responsibly and in a statesman-like way. Can the same be said of the Government? The record clearly says definitely not.

If a Government are not credible, not frank and honest and not seen by example to keep down the cost of living effecttively and not let it go out of hand as it is now they cannot have credibility. They have lost control, as was quite clear when the bank interest rates went up when you had the Government saying there was not much they could do about it and on the following Sunday you had a senior Minister on the Government side taking the banks to task. So much for responsible Government. They were playing politics with the banks and trying to shift the onus of responsibility onto the banks. They are elected to govern and take decisions.

Debate adjourned.