Dáil Éireann debate -
Wednesday, 22 Oct 1980

Vol. 323 No. 4

Government's Economic Policies: Motion (Resumed) .

The following motion was moved by the Taoiseach on 21 October 1980:

That Dáil Éireann reaffirms confidence in the economic policies of the Government and expresses approval of the measures being taken by them to mitigate the effects of the present world recession, to expand employment, to assist the agricultural industry and to promote general economic development.

Debate resumed on amendment No. 1:

To delete all words after "That" and substitute

"Dáil Éireann affirms its lack of confidence in the economic policies of the Government, and particularly its concern at the rise in prices, unemployment, and public borrowing, the collapse of agricultural incomes and of tourism, the failure to provide adequate funds for local services such as housing, health and roads, and the chaotic state of industrial relations."

—(Deputy FitzGerald).

and amendment No. 2:

To delete all words after "That" and substitute

"Dáil Éireann:—

—Noting the continuing dramatic increase in unemployment:

—Noting the Government's failure to make any significant impact on the inflation rate, currently running at almost 20 per cent;

—Noting the prospect of sharply increased foreign borrowing for purposes unrelated to productive investment;

—Noting that the problems facing some of our traditional industries have now reached crisis proportions;

—Noting the serious fall in farm incomes in the current year; and

—Noting the decline of the tourist industry

Declares:

—That the Government's mismangagement of the national economy is now a question of fact rather than of opinion; and

—That it believes a general election should be called to give the electorate the opportunity to pass judgment on the Government's failure."

—(Deputy Cluskey.)

Minister for Posts and Telegraphs (Mr. Reynolds)

: Before Question Time I was giving the House a comprehensive account of the developments that are taking place in my Departments, developments which are making a significant contribution towards the economic development of our country. I was dealing with McKinsey study of the CIE operation. I should like to state that that study also included an analysis of the underlying financial and operational characteristics of each sector of CIE services covering passenger and freight services by road and rail as well as the social and other non-financial benefits and cost of major services. Before I conclude my remarks in relation to the McKinsey study I should mention that it has been recognised since as far back as 1964 in this country that a continuing subsidy would be necessary to meet the costs associated with the operation and maintenance at satisfactory levels of the rail network. The Government in their determination of future rail policy will of course be alert to the fact that operating costs in the case of many services will far outstrip the financial return from the provision of such services. It will be the Government's responsibility to ensure that an even balance is struck between the needs for such services and the costs of providing them.

Turning to more immediate matters, Deputies will be aware that work is now well under way on the electrification of the Howth-Bray suburban railway line. This modernisation of the service takes account of the large increase in passenger numbers using the suburban rail services. In 1970 the daily number of carryings on the service was 12,600 and this has now grown to an estimated 35,700 daily carryings in 1980. CIE expect that the project, which will cost an estimated £57 million at 1980 prices, will be completed by 1983. The electrification of the Howth-Bray service includes, of course, the introduction of modern rolling stock which will be capable of rapid acceleration and deceleration. The new carriages will be used in train sets of two, four or six carriages as demand requires. The signalling system is also being replaced which will eliminate some of the delays which beset the existing services. New stations will be opened on the line in order to cater for the anticipated increase in daily carryings which CIE expect will reach approximately 80,000 in 1985. At the present time over 130 people are employed on the project by CIE. The number employed is expected to reach a peak of 280 in the next two years. The disruptions to services which are being experienced at the present time are a result of the work in progress and are very much regretted. I can assure the Deputies that everything possible is done to alleviate the inconvenience to travellers. Unfortunately, a project of this magnitude, involving as it does complex and protracted working on what are probably the busiest railway lines in the country, must give rise to disruptions in services.

To encourage greater use of the bus services, as recommended by the Transport Consultative Commission in their report on passenger transport in Dublin, a substantial improvement in the standard of the existing bus fleet will be necessary. For some time past now CIE have had considerable difficulties with their bus fleet. The present Atlantean bus which comprises the major proportion of CIE's double decker fleet has given rise to operating and maintenance problems. CIE's future bus requirements will now be provided from the Bombardier bus building factory at Shannon. The factory is operated under a management contract agreement with CIE whereby the factory premises are leased by CIE who also own the manufacturing and other ancillary equipment. Therefore if the agreement were to be terminated. CIE would be able to operate the factory on their own account.

Production started at the factory on 1 August 1980 and delivery of the first bus is due on 10 November. The production plans are for the manufacture of 50 single-deck buses initially, followed by double-deck buses for Dublin city. Delivery of the first double-deck buses in Dublin is expected to commence in March 1981 and CIE expect to take delivery of about 200 double-deck buses in 1981. Particular attention has been paid to the design of the buses to ensure that there will be no recurrence of the maintenance difficulties which the company experience with their present fleet. Before concluding I should like to ask the Opposition to avail of the opportunity of this debate to spell out to me and the Government any or all of the projects to which I have referred today which they believe should be scrapped or put on the shelf. This is what talk of cut-backs really means. If some of the projects to which I have referred should not be proceeded with now is the time to say so. I think that from what I have said Deputies will recognise my commitment to use all my influence as Minister for Transport and as Minister for Posts and Telegraphs to assist the Government in their singleminded determination to mitigate the effects of the present recession. Ours is a developing economy. Our young and growing population need jobs. The future growth of economic activity depends on getting the infrastructure right. This is the Government's clearly stated objective as enunciated by the Taoiseach yesterday. This is a time for action not for words.

I have had to cover a lot of ground because many developments are taking place and many projects are being undertaken for the benefit of the development of this economy. I believe our economy needs them now. If the Opposition feel they should be deferred, now is the time to say so. If we put them back they will cost more in the long term. If the Opposition feel that real cut-backs should be made in this area they should spell it out here and now. Action speaks louder than words.

Mr. R. Ryan

: If there were to be a prize in this debate for reading I would give it to the Minister because he read to this Dáil, which is supposed to express the views of Members elected by the people, not his own views but views prepared for him by a battery of civil servants from the old Department of Posts and Telegraphs and the old Department of Transport. He had not even the wit to conceal this fact because Members were handed—I suspect the press also—two scripts separated by two green tags, one prepared by officials in the Department of Posts and Telegraphs and one by the old Department of Transport. If this Parliament becomes so base that it is no more than a record of the writings of civil servants—not that I regard them as base: there is sample opportunity for civil servants to write and present their views—it is really showing contempt for this Parliament when Ministers come here, talk at machinegun speed through a brief prepared by others and out of 45 minutes give about two minutes of their own thoughts, not particularly brilliant.

I have been here since morning and I have heard three Ministers speak from briefs which would not be significantly different no matter what Government were in power. This Parliament has become under Fianna Fáil a place where Ministers come in to read speeches prepared for them by civil servants throwing in the odd naive comment so that they can give expression to wise views when they speak as civil servants and give expression to political mischief when speaking as politicians. That is not the Parliament I joined more than 21 years ago. In my 22nd year in this House I speak with grave feelings of disappointment that this House and democracy are becoming more and more debased in our society so that in a general debate which is supposed to consider fundamental principles we have Ministers here talking about the inadequacy of the telephone service and the size and frequency of buses. We are supposed to deal here with fundamentals and how our economic and social development has gone wrong as it has gone most seriously wrong since the present Government assumed office. While difficult international developments have added to Ireland's problems as they have added to the problems of every other country in recent years, the current recession in Ireland carries the label "Made in Ireland by Fianna Fáil".

The policies of the present Government elected every Deputy on the Government benches. They are the reason why this country is now in the depths of a depression and cannot get out of it. The cupboard is bare; the real tragedy is that it was never necessary. What the Government did over the last three-and-a-half years was as wrong as wrong could be. I do not speak with hindsight of this sad experience. In the budget debate of 1978 I said that the policy embarked upon by the Fianna Fáil Government and being continued by them was—and I quote from my remarks—"as wrong as wrong could be." I should like to amend a well-known dictum that a prophet is never appreciated in his own land by adding "until it is too late".

This nation is now undergoing and will for the next couple of years undergo tribulation, a level of unemployment, a level of price increases, a loss of investment in Ireland that would never have been suffered if the Government had been only half sane since 1977. It will be recalled that at no time—most unusually—during the general election in 1977 was it ever suggested that the country was not economically sound. The present administration inherited a solvent country with Europe's fastest growth rate, fastest growth in employment, investment and production together with a dramatic decrease in the cost of living and a dedicated and publicly announced and fulfilled programme of reduced Government borrowing—from 16.2 per cent of gross national product in 1975 to 11.2 per cent in 1976 and down to single figures in 1977, single figures unfortunately boosted by a popularity gimmick by those who succeeded us in June 1977, who threw money away in the autumn of that year which now they would dearly love to have.

We had improved efficiency in the public service to such an extent that for the first time in 25 years there was an increase in the volume of output from every public sector employee. Although we increased public services, although we increased the amenities made available to the people by the Government, we stopped the insidious growth in the public service of 6 per cent per annum down to a mere 1 per cent, and that 1 per cent included increases in the number of teachers and gardaí, the number of teachers to deal with our growing young population and the number of gardaí to deal with security problems which had been neglected by our predecessors. Notwithstanding that, we achieved a great economic miracle.

It is worth recalling that in 1977 not even our bitterest opponents, and they were not all in the Fianna Fáil Party but they were supporting them, would suggest that the economy was not sound. Today they all know that the economy is direly sick. That might not be a terrible tragedy were it not reflected in the misery of the unemployed, of the neglected people who are well below the level of what is necessary to attain a decent living standard. Unfortunately Fianna Fáil know that the people who are most deprived are not the most critical and are not in a position to organise themselves to deal political blows against the popularity of the Government.

The only criticism offered against us was that when things were sound we were not moving fast enough. The Cosgrave Government rightly maintained that our policies would have sustained increased employment without extra taxation or unsound borrowing. I will quote my own words:

To push the economy faster would only bring an explosion of inflation, ruinous wage expectation, a deficit in the balance of payments, unwise growth in Government borrowing and taxation and restore the flabbiness in the public sector which we have greatly cradicated.

I am too long in the political tooth to take joy from being proved right, but all of those dismal forecasts that I made if the Government embarked on their spending spree have come true and would have come true irrespective of the so-called oil crisis of 1979-80 which. I hasten to point out, in price terms is only a quarter of what we, without any previous experience, had to deal with in 1974-75.

Mr. Quinn

: Hear, hear.

Mr. R. Ryan

: Leave aside matters of political consideration and of personal frustration, in the mid-1970s many people made sacrifices here because they were led by a Government who were able to prove to them that sacrifices were necessary, and they made them. The trade unions and those they represented understood the problems and were prepared to forego what they would have expected as their rightful reward if times were better.

Why has the belligerance of the trade unions exploded in the last couple of years? It is because we are now ruled by a Government who threw aside the efforts of the National Coalition to achieve equity in taxation, equity in contributions, even treatment.

The loudest clap I have heard in this House was delivered when it was announced that wealth tax was being abolished, the most benign wealth tax in the world which barely scraped at the surface of the wealth held in this country, and the justification was "Abolish it and you will increase investment". Investment now is lower than in 1975-76. It is at its lowest level for years. A spurious campaign was carried on against our efforts to get equity into the Irish political, social and taxation systems, all in the name of encouraging investment which has not come and will not come either from Ireland or from abroad. Investment from both areas has fallen off. One thing to be said in favour of wealth tax is that it would encourage people with wealth that was not earning a profit to get rid of such wealth and hand over such property to those who could generate a profit out of it.

All that has been changed. We have created in the minds of our people the feeling that the Government do not care, that the Government are looking after the privileged few and not the welfare of the many. I do not speak as either a socialist or a communist—I disagree with many of the tenets of socialism and communism—but I have some understanding of the reactions of ordinary people. They are sick to the teeth of the economic jargon with which they have been forced to live in the last 20 years.

When I entered this House I argued there was not enough serious economic talk. I was a product of the economics school of UCD. Now we talk economics but we talk little realities; we use the jargon and the jargon has achieved great prominence under this Government. I do not know if many people have wearied themselves by reading the second national understanding document, particularly the first 2¼ columns contributed by the Government. They do not refer to 1979 and 1980 because that might be understood by simple-minded people. In this document the calendar has been rewritten officially and 1979 becomes "end-1978 to end-1979", and 1980 becomes "end-1979 to end-1980". There is not a teacher of English, or of an teanga náisiúnta for that matter, who would not fail any child doing an essay for writing a line of such gobbledegook, but the Government's contribution to the second national understanding document has been written line after line in such nonsense.

An interesting aspect of the same second national understanding—I do not regard either the so-called second or first national understanding as being worthy of those titles—is the use of the phrase "It is an integral part of the understanding ...." But the first national understanding does not use the words "integral part", because of course it is not. It is a load of political garbage that is not worth sweeping up and dumping because most garbage has at least a fertilising quality, but the garbage of the Government in the second national understanding has not.

What is the Government's assurance to the people that their policies will generate employment? Unfortunately I have not the text before me but I do not think anyone will fault my phraseology. They say that a monitoring group will be set up as was set up under the first national understanding to ensure that the targets will be met. What is the reassurance there? The first targets were not met. We have not had anything but a sad cynical silence from the monitoring group.

In a healthy democracy people look to the Government to solve their problems. Now the Government of Ireland are the problem. The Government's annual expenditure amounts to 50 per cent of what the people of Ireland produce. In other words the Government are lifting 50 per cent of what the people earn and then spending it. The Government naturally dominate our lives. Twenty years ago Governments spent only 28 per cent of what the people produced. That has risen to 50 per cent. When government is bad, as government now is, our lives obviously suffer. It is this element which has led people to a tax revolt on a scale never previously experienced. Much of that tax revolt would not exist if people were convinced that Government money was being well spent. They do not see it as well spent when it is offered as slush money. The present Government are unfortunately guilty of the sin of sloshing money around all over the place to buy votes.

My only grain of hope as an individual Irishman is that there is a rebellion coming against all politicians of all parties who offer more and more dishonestly-called free Government services because the people see again and again that the free public services are dearly paid for by them through increasing takes in taxation.

I spoke earlier about the switch from non-economic to economic debate. I do not want to talk about this in jargon only. I am concerned also about it in terms of philosophy, conviction and dedication. If the people were convinced that their taxation would go to productive purposes, to generating more employment and so on, there would be a willingness to pay tax. They do not see it going that way but as more and more give-aways not related to work, not related to effort and not related to sacrifice.

We are really using gentle euphemism when we talk of Ireland being in a recession. Recession is a euphemism for what Ireland is now experiencing, a depression. There is a depression in retail sales on a scale not previously experienced. Any person in the retail trade knows that the fall-off in sales now is much greater than it was in the mid-seventies. There is a serious depression in wholesale sales because retailers are not prepared to stock shelves with goods which will never be bought. As a result our manufacturers are reducing their production because they have no sale for their products. The one ray of hope, the reduction in our imports, is also a direct consequence of the depression in Ireland because the great growth in imports in recent years was to a considerable extent due to people purchasing consumer goods which there is no longer a desire to buy because people are severely depressed.

The one economic factor which appears to be improving is the balance of payments but that is for the worst possible reason—lack of investment. This year while consumer products have declined it is nothing as grievous as the decline in the number of capital goods being imported. This augurs badly for future employment particularly in 1981 and 1982.

There is a grievous fall-off in house building reflecting a fall-off in house purchases. If ever there was an economic activity to be stimulated in depression it is construction because it has the smallest element of imported goods and the maximum element of Irish labour. Yet in this critical area there is a continuing decline with no sign of relief for a long time to come. The banks are full of money that they cannot lend because people cannot afford to borrow or because they lack confidence in themselves and in their potential. They see no point in borrowing because they cannot sell their goods and services. Lay-offs in industry are continuing at a rate much faster than anything experienced since the last war. There is a continuing postponement of projects and the enlargement of projects.

While figures from the IDA are still encouraging in the sense that they indicate future intentions the reality is that in 1980 and 1981 the actuality is quite different from what was originally intended. This most depressing picture, which I give without any sense of joy, I give feeling depressed and disappointed because much of it could have been avoided. Nobody will be enthusiastic about or has gone to the gallows about GNP, CPI or margins of growth, balance of payments and so on. We do not get excited at election time about these things. That is understandable because they are beyond the ordinary people's understanding.

This country needs leadership which will enthuse people to a positive way of life and to a realisation that mistakes were made. I could respect the Government if they admitted that mistakes were made. They made serious mistakes which made our present difficulties more serious than they need have been. If that were said by them it would be great for the country. There is a considerable amount of false satisfaction taken by some people out of the position of the IR£ in the EMS. When my colleagues and I succeeded to Government we found that no preparations whatever had been made by our predecessors in office to break the link with sterling even if it became the wise thing to do. I know there are many people today who have a reaction which is unfavourable to the severance of the link because the IR£ stands at 82p against the £ sterling. Difficult and all as our export sales are today we are selling abroad, particularly in the UK and related areas, because we have allowed our £ to be debased as against the £ sterling. Irish exporters to the UK now have an advantage of 17p to 18p, 17 per cent to 18 per cent, in price in their exports to the UK. Where would our exports, which still amount to about 50 per cent, be if we had not got that trading advantage in relation to our exports to Britain? Our economy would be in a deeper depression than it is. It is desirable that that should be understood because it is not understood generally that this disappointment that we all feel personally, as we are exchanging currency notes, has not been related to our trading advantage in the UK and, despite that trading advantage, we are still in difficulties with our exports.

Strangely enough, if the British £ was to decline now and our own £ was to remain static it might provide comfort to many people who would think that our economy was about to recover. I think that the time is not far away when the British £ is going to fall on world markets, because interest rates in London will fall and the significance of oil may be less than it is at present. However, if that happens there is a danger here that the people would become euphoric that the Irish economy is recovering, but it will not be because the value of the IR£ in the EMS will fall as the relationship between the IR£ and the British £ narrows. Our exports in Europe, which have increased dramatically in the last seven years would then fall off. About 50 per cent of the value of the IR£ in the EMS is attributable to sterling. If sterling falls the IR£ is going to fall in the EMS; therefore, although all our exports to Europe might not fall, the rate of inflation is going to increase. Therefore, there is no satisfaction at all in the currency situation with the EMS.

What is particularly disturbing is that so many of the so-called economists who guide our lives far beyond what economists ought to be able to dictate are avoiding the reality of Irish currency, and that is that if it were looked at in its own worth without regard to the EMS, IMF or any of those three-letter multinational safeguards, the IR£ would plummet like a lump of lead in water. Everything that devalues a currency is happening in this country under the Government's policy with inflation out of control and the Minister for prices, Deputy O'Malley, sanctioning daily further and further increases, seeing as the alternative even more unemployment in Ireland in the short term, while all that he and the rest of his colleagues are living to is the next general election.

I believe that the IR£ analysed on the international money market will devalue by at least another 10 or 20 per cent when the rate of Government borrowing is taken into consideration. It is 14 per cent of GNP and our GNP is well below what it ought to be. We are borrowing 14 per cent. In this the nearest country to us in Europe is Belgium which is acknowledged in Belgium and across Europe and the world as in a state of economic crisis. Belgium's Government borrowing amounts to 7 per cent, half of what ours is, and a state of crisis is recognised there which has brought down three Governments in nine months. Our rate of price inflation is three times greater than the average of Europe and our rate of wage inflation, not unreasonably, follows the rates of price increases at a similar level so that it is treble the increase of the average of Europe.

These are the economic realities through which we live. I was interested to hear Members of the Government side underlining these things. That is a bit belated on their part. They denied every one of these economic indices, these economic inevitabilities, throughout the mid-1970s. I am not denying them here today. I have never denied them. What is wrong is that this country is cursed with people who ignore them, who pretend that they do not matter, who say that we will waffle through somehow or other. We have not waffled through. That is the reality today which too many of our unemployed know. Young people who cannot get jobs after leaving school know that the waffle, the economic jargon has got them and the rest of the country nowhere.

We set out upon a deliberate policy, which we announced to the world and to Europe in particular, of reducing the levels of Government borrowing. We were laughed to scorn by our opponents who produced the fool's alternative to reducing expenditure—borrowing. Had our successors followed our policy of a three-year sustained growth in public borrowing much of the inflation, import growth and damage to the country's financial standing would have been avoided.

The Government's much vaunted programme of job creation is now a burst balloon. I believe that there would be more people working today and more jobs would have been created since 1977 had we not had the Government's expenditure spree. I say this objectively in the economic sense and not the political one. The main consequence of the Government's expenditure spree from 1977 to 1980 was not the creation of jobs in Ireland but an increase in imports, particularly of consumer goods, shoes, shirts, blouses, dresses, garments and textiles, all of which were made in Ireland and would still be made in Ireland were it not for the rate of inflation injected by Government expenditure. I base that not merely upon Irish experience but on the experience of the world. The rate of inflation in Ireland would be about 15 per cent less than it is now, in other words we would be 15 per cent lower now in our costs than we are had not the Government engaged in this spending splurge of 1977, 1978 and 1979.

My colleague, Deputy Kelly, very properly quoted today from a respected Senator, Senator Whitaker who was appointed to the Seanad by Deputy Lynch when Taoiseach and I am sure he was appointed there not on the basis of party allegiance but upon the contribution which he could make to the world's economic and social welfare. Senator Whitaker, in the polite terms that he uses invariably, has condemned the Government for their expenditure spree. I come back to the modest words I used in 1978 and I repeat them today, that the Government in their policies for the last three years were as wrong as wrong could be. It gives us no satisfaction to recall these now because we know that we will have to face the problem of dealing with them shortly when we come back to Government. I do not want either our side of the Irish political divide or anybody else to delude our people further. If we do we are going to get them further and further into the mess. Neither do I want anybody when the day of reckoning comes to blame the IMF for the disciplines which will be necessary to get ourselves right. The worst and most corrupt banana republics in the world all too readily blame the IMF when, just before they sink to the bottom, they have to stretch out for financial aid. The IMF are not a terrorising ogre that loves to impose penalties on people. They are an international institution pointing the way to economic wisdom and survival.

I believe we are moving towards being obliged to refer to the IMF for assistance. It is quite possible, as happened at the time of the last election, that people will make inquiries and find that there are banks in the world ready to lend money. Why are they ready to lend money to us and others now? Simply because the OPEC countries have billions of surplus dollars which they cannot lend to anybody because of the world slump and they might as well lend to Ireland as to anybody else, knowing that sooner or later economic wisdom, truth and discipline will be enforced upon us because of our need to go to the IMF to bail us out of our obligations to specific bankers.

The difficulties of the most hungry and deprived nations of the world are much greater than they need be because private bankers were prepared to lend them money from the early seventies until today. Now the IMF are bailing out those bankers, not the people. When the not-too-distant day comes when the IMF are called to our assistance it is the bankers who will be bailed out first and the people of Ireland will be asked to carry the burden of the years of economic lunacy in which the Fianna Fáil Party plunged us when they sneaked back to power on the basis of economic untruths in 1977. We now find ourselves in a situation where other countries are retrenching on borrowing and we are expanding our borrowing. Most of our borrowing is from abroad which means that in relation to interest which we pay on such borrowing there will be no return to the Irish taxpayer. If borrowing is made domestically there will be a return to the Irish taxpayer because the profits will be subject to Irish income tax. We are now borrowing abroad at unacceptable levels for purposes which are not, as they ought to be, always capital purposes but to a large extent for current expenditure.

I suspect that quite a number of people sighed with relief when the Taoiseach announced that the excessive cost of the second national understanding—I always use quotation marks when referring to the so-called "second national understanding" because it is misnamed and shows a total misunderstanding of economic reality—would be paid for not by extra taxation but by borrowing. Borrowing is the fool's alternative—the knave's alternative—to taxation and obviously costs more because money borrowed must be repaid with interest. When one considers that interest payment in relation to what I have said about the probable devaluation of the Irish pound in the near future, one will realise that foreign borrowing is at present an excessively costly item. Our borrowing is costing about 27p in the pound to the Irish taxpayer and income tax could be virtually abolished in this country if we did not have to repay our debt. Bad though the situation is now, it will become much worse if the Government continue their present policy and when, as a consequence of that policy, the IR£ is deliberately devalued, if not by us then at least by the markets of the world and by our partners in the EMS.

In government we became unpopular because we were emphasising the inescapable and unavoidable link between public spending and public borrowing and taxation. If I were never again to be elected to this or any other assembly I would still insist upon the truth that no Government in any country can engage in increased public spending and public borrowing at the level which has operated in this country without involving more taxation and by more taxation more disincentive to work. Such disincentives to work have been built into this system for many years and I do not blame the present administration for this. They were at it before they were ousted from office between 1973 and 1977. They would never have seen office again if it had not been for the world recession which was, I remind the House and the country, four times greater than what has been experienced during the past 12 months. They got back to office by confusing the people. This is, perhaps, the reason why recent opinion polls showed that 26 per cent of our electorate do not know how they will vote in the next election.

I am not concerned with party interests now—I hope I never was, but I suppose they often entered into my thinking. After 22 years in this House and having handled the economy for four-and-a-half years, one is no longer really concerned with which side wins, which flag remains aloft at the end of the battle. I am concerned with the rising young generation. Thanks to the decline in emigration, particularly under the Cosgrave Government, I am concerned with them and their hopes of living in a country which might be able to offer them something instead of the dismal picture which exists at present. We cannot offer them anything on the basis of present policies which are geared to increasing the comfort and protection of those who are lucky enough to be well provided for and call for ever greater sacrifices from the people in the middle ground and the under-privileged. We cannot offer a future if we mortgage that future at a rate which is three times greater than the European average. We have no right for our own personal and current comfort to hang around the necks of future generations a millstone of £2.25 billion external debt and £4.25 billion internal debt. The great tragedy is that so much of what has been borrowed in recent times has been not for investment in the future in which those people have to live, work and fulfil their dreams but for the winning of the last election for Fianna Fáil and helping them to get over the lump of the next election.

I am not suggesting the abolition of or interference with democracy but it is at times like this when one sees a great and hopeful society brought down to the level of depression which now exists that one begins to wonder what is necessary to prevent the people from being deluded. The Government will say that is not their problem and I accept this; it is our problem in opposition. The sooner the better we get down to providing the answer. I say to my colleagues in public as I have said to them in private that we should not try to buy votes with the taxpayer's money but rather tell them the truth. I believe our people will rally to the cause of providing this country with what it can produce, an economy and society which can be the envy of the world.

Minister for Labour (Mr. G. Fitzgerald)

: I am glad of the opportunity of contributing to this debate on the economy in a positive, progressive, forward-looking and optimistic way. I listened with interest to some of Deputy Ryan's comments. All I can say is that his memory seemed to be short for a period. It extended beyond a particular period but seemed to miss 1973-77. I do not have to remind the Irish public. Their memories are not that short.

I want to contribute in a positive way. Manpower policy, industrial relations and public sector pay policy are the principal areas within my responsibility which are important elements of the economic strategy of the Government. Concentration on these three areas, each of which interacts with the others, is vital to our efforts to overcome the problems thrown up by the present world recession so that its effects are minimised on our people, our industrial development and on the employment of our young and growing population. I heard the previous speaker refer to emigration figures. I do not have them with me but I can certainly contradict what he said about emigration because it was prior to 1973 that, thankfully, our emigration figures turned under a Fianna Fáil Government for the first time. The reverse had happened again before the Coalition Government's term of office ended. I am glad to say—and the statistics will prove me right—that the trend was reversed yet again when Fianna Fáil returned in 1977. I say that in reference to our young and growing population because I believe in the minimising of the effects of world recession on our industrial development and on the employment of these young people so that a longer-term policy of continued economic growth and the creation of jobs would be that bit easier to achieve when the world economy begins to expand again.

Since the beginning of this year we have witnessed yet again a worrying increase in unemployment as a result of this world wide recession. In Ireland as elsewhere the closure of firms and the resulting loss of jobs has always been a feature of industrial and commercial life. In present circumstances however the excellent results being achieved, particularly through the promotional work of the IDA in the area of job creation, so badly needed here, is counter-balancing to a considerable extent the high level of job losses in our older manufacturing industry.

Over the years particular attention has been given by the Government to the problems of firms in difficulties and facing closure. The objective has been, and will continue to be, to avert closure if this is at all possible and thus reduce if not stop altogether the job losses threatened. The primary responsibility for the financial soundness and general wellbeing of individual manufacturing enterprises rests with proprietors and managers. In recent years, there has been a tendency on the part of proprietors and managers to be somewhat slow in bringing to the attention of State agencies the problems confronting their firms. This is an area which could be improved and is receiving attention. I discussed with the ICTU during the negotiation of the new national understanding, the role which the trade unions can play in averting job losses. If the firm is threatened, I believe management and unions must work together to avoid closures and save jobs.

Indications are that the employment creation targets set by the IDA for this year will be achieved. The targets will draw heavily on our highly qualified and skilled manpower resources. In anticipation of these demands I have adopted a number of measures to increase the vital supply of people in the necessary skills. We must remember that the employment of a worker in a key position can create a significant number of other less skilled or unskilled jobs. The contribution of the Manpower Consultative Committee here has been most impressive. The House is aware of the composition of that Committee. It has brought a new sense of purpose, co-operation and commitment by industry, trade unions and Government agencies in tacking manpower problems and identifying what further contribution is needed from manpower policy. As Chairman of that Committee I may say that the co-operation I receive is tremendous. Progress is worthwhile and my only criticism is that it was not set up before I set it up in 1978. The committee's work is perhaps best evident in the success of the measures taken to alleviate shortages of key personnel in industry without whom our employment growth potential could not be met. Within twelve months some 1350 key workers have been attracted from abroad and a further 300 additional qualified engineers, technicians and computer personnel have already emerged from the manpower education programme. By 1984 the programme is expected to supply almost 1,400 additional key personnel annually and the key personnel open up opportunities for other less skilled or unskilled people. This is the significance of the key worker.

Other proposals put forward by the committee and acted upon are pilot link schemes in nine areas to help bring schools and local industry together as a means to improving attitudes towards industrial employment. Regional manpower committees have been set up in three regions and will be set up in the others so that regional labour market policies can be developed and put into effect. This is very important. A manpower information publication is being published quarterly and I am taking steps to improve labour market information generally.

One of my highest priorities in Government is to make available substantial resources to encourage and provide employment for our young people. Last year youth employment schemes provided places for well over 11,000 participants which compares with the figure of only about 2,000 participating in youth schemes in 1977. It would be true to say that those young people's memories are not short either.

The indications are that the measures we adopted proved very successful in reducing the level of youth unemployment up to the end of last year. This year the amount we have allocated for youth employment schemes is similar to the amount spent last year. This I believe will help to avoid what happened during the 1974-75 recession when the last Government allowed unemployment to fall disproportionately on our young people. We must never forget the terrible social effects of unemployment on school-leavers and the long-term effects their unemployment has on our capacity to compete on the world market with an efficient, committed and young work force.

With this in mind I asked the Manpower Consultative Committee to examine the youth employment situation. The committee has recently completed its discussions on this problem and will be publishing a report on the problem shortly. The report makes a number of recommendations which I am sure when implemented will contribute to easing youth employment difficulties. We have also asked the OECD to undertake an examination of our youth employment policies and this will commence next year.

An effective placement service is a vital link in the set of measures designed to make the labour market function more efficiently. The basic function of our National Manpower Service is to successfully match job-seekers with available jobs and training opportunities and to help meet employers' staff requirements quickly and effectively. The absence of such a service would substantially diminish the opportunities and benefits resulting from our major job-creation and training efforts. Indeed, I believe that the placement service plays a vital role in influencing our job-creation and training policies, because of the service's specialised knowledge of local and national labour markets. The National Manpower Service are of particular help to new companies starting up and especially to foreign companies whose knowledge of Irish recruitment procedures may be limited. Indeed, the National Manpower Service co-operate very closely and very effectively with the IDA in this area.

I want to underline also the social dimension attached to the work of the NMS. This side of their work was well defined in an OECD report which suggested that manpower policy should

seek to provide each individual member of society with the possibility of attaining the situation which he conceives as the most advantageous in terms of personal satisfaction and real income.

The work of the placement service is closely interwoven with individual job-seekers and their problems.

I am totally committed to the work of the National Manpower Service. When I assumed office I set about getting the resources it so urgently needed. I am happy to say I have been successful in my efforts. For example, at the beginning of June 1978 there were 92 placement officer positions. This figure stands now at 150. Similarly I have expanded the occupational guidance service and, by the end of the year, I hope that all regions will have at least one guidance officer.

If I might, with the permission of the Chair, now correct a figure I gave earlier. I understand that I mentioned a figure of 1,100. I should have said 11,000. I say that to correct the records. I was referring to the number of persons in the youth employment schemes last year.

Between June 1978 and now the number of National Manpower offices rose from 27 to 37. I plan to open five further offices in country locations, at Mullingar, Tuam, Thurles, Newcastlewest and Letterkenny and four offices in Dublin, in Finglas, Coolock, Tallaght and Ballyfermot, all to help to bring the services closer to the people. The services provided for employers and job seekers are continuously under review. At present I am looking in particular at the services provided in the area of professional and executive recruitment. Deputies will appreciate that a speedy and effective filling of high level vacancies is of considerable importance to the economy. The systems being operated by placement services in other countries in relation to the filling of such high level vacancies are being examined with a view to developing this type of service here.

Within the next 12 months I also expect to secure a further improvement of the employment service by computerising its information gathering operations. This will allow the earlier publication of the most up-to-date labour market information on a national and regional basis. Work is also well advanced on the design of a computer system to assist in the matching of job seekers and vacancies which will speed up the placement process which will mean that time spent by many job seekers in unemployment will be reduced. I have decided to introduce a computer assisted placement service in the east region by 1982.

Despite these developments I am not yet satisfied that the National Manpower Service has all the resources and flexibility it needs to maximise its contribution to the formulation and implementation of employment policy and to react quickly to the changing labour market. I will continue with my efforts to provide this country with a full and effective State placement service as a key element of our manpower policy.

I would like to mention two other areas of particular interest. As regards the inner city of Dublin, at the request of the Government's Special Inner City Group my own Department have drawn up a special programme aimed at persuading employers, by means of a generous employment premium, to give jobs to people in the inner city. The National Manpower Service is drawing up a special register of unemployed persons from the inner city from which employers can fill their vacancies in order to qualify for the premium. The persons on the register will be those who have special problems in getting jobs. This I believe to be a most desirable step by Government.

Responsibility for monitoring progress on the quota rests with me as Minister for Labour. I am glad to report that steady progress is being made by all agencies involved and in particular I am very pleased to say that the special competition for clerical assistant in the civil service confined to disabled persons is in progress at present. I am confident that the results of this competition will be available in time to have the first appointments made by the end of this year. Both of my Departments have been having discussions with the Civil Service Commission with a view to opening up additional civil service grades to the disabled and I hope to be in a position to make an announcement on this in the near future.

Discussions have also taken place between my Department and the health boards, local authorities and other State bodies and agencies and all of them are reviewing their recruitment procedures with a view to opening up more employment opportunities for disabled persons in line with Government policy.

I am confident that there will be a significant increase in the number of disabled persons employed in the public sector by the end of the International Year for the Disabled and we should be well on the way to achieving the 3 per cent target by the end of 1982.

Another important aspect of our manpower policy is industrial training.

Over the years the State's contribution to the financing of training has increased substantially, and this has been supplemented by assistance from the European Social Fund. This year the grants-in-aid to AnCO were increased by 25 per cent over the grants for 1979. This is made up of current expenditure, which was increased to £16.8 million as against £13.475 million the previous year; while capital expenditure is £5 million as against £4 million. The Government recognise the significance of training at a time of a difficult employment situation and are committed to providing the finance necessary to meet the increased training demand.

The proposed new national understanding includes among the list of possible measures for achieving an imporvement in the job situation the "maintentance and if possible increase in intake into apprenticeships and training". Extra money is being made available to AnCO so that they can exceed their original budget this year. This will enable AnCO to take over responsibility for many apprentices affected by the economic recession, for these young people are the backbone of our continued industrial development. I have no intention of repeating the mistakes of the last Government in allowing the apprentice intake to drop resulting in a future shortage of skilled persons.

For next year the Government are prepared, as they have undertaken to do in the discussions on the new national understanding to "increase the State's contribution to the financing of training to ensure an adequate supply of workers with appropriate skills and to provide for training and retraining of unemployed persons".

It is important to ensure that as we emerge from the present recession progress will not be hampered by a lack of skills. Here I must point to the primary responsibilities of employers themselves to provide for their training needs. It must not be forgotten that the principle on which the Industrial Training Act is based is that training is first and foremost the firms' responsibility; the Government are providing the means for training.

The Government will continue to play their part in seeking to ensure that the country will have an adequate supply of the skills required and, given the present economic circumstances, are ready to increase their contribution as I have indicated. I am already discussing with AnCO and also with CERT their capacities for taking on more trainees. We must be all concerned however that the training is not just training for its own sake or merely a way of occupying the time of persons who might otherwise be unemployed. Training, I am sure Deputies will agree, must be relevant to the needs of our economy and the reasonable aspirations of those being trained.

At a European level the Government have pressed for and obtained increased resources to help with the serious problem of youth unemployment. New schemes to assist vocational training and job creation programmes have been introduced with the aid of the European Social Fund. Ireland's receipts from the Social Fund in 1980 will be well over £50 million and increased expenditure on training is planned for 1981.

Despite the problems created by the recession the Government remain fully committed to the implementation of their policies for economic and social development. We remain determined to maintain a satisfactory level of progress and will not allow ourselves to be deflected from our economic objectives or deterred by any obstacles, whether internal or external.

In this context the Government have consistently maintained that the achievement of a further national understanding on reasonable terms is of major importance. I can say that the Government are prepared to uphold the understanding in all its details and I hope that the other parties concerned will endorse the draft understanding tomorrow. It is designed to provide a framework within which, with the co-operation of both sides of industry—and surely co-operation and consultation is the way ahead, particularly in times like this—an integrated programme on employment, pay, social welfare, education, health and taxation can be pursued.

The proposals for a national understanding set out the general operational framework, including specific measures and policies, which the Government have in mind to maintain economic and social progress up to the end of 1981.

The draft understanding, in my view, goes very far to meet the legitimate aspirations of workers as regards pay and conditions over the next 15 months, or so, while providing reasonable safeguards so far as employers are concerned. The pay increases provided for in the draft agreement have, indeed, been described by many commentators as being more than might be prudent on purely economic grounds. The terms can be justified only if there is a clear and positive commitment by all parties to observe strictly all the provisions of the agreement.

The Government are firmly committed to honouring their commitments under the draft national understanding. In the interests of the community at large in this small country, which is so dependent for survival on trade and commerce with other countries, I hope that workers and employers will endorse the terms of the draft understanding and that they will all make a concerted effort to ensure that its terms are complied with, both as regards the letter and the spirit. If there is a positive approach and a spirit of co-operation, they will reap a harvest of more work for our young people and for our unemployed. In the long term this means more prosperity and a better life for all of us.

As regards job creation, we affirm our commitment to the earliest possible achievement of full employment. Indeed, Government expenditure is concentrated mainly on creating new jobs. Although the scale of such investment relative to GNP is proportionately one of the highest in the world, the continuing rise in unemployment is very disturbing. The rise in unemployment in recent months must, however, be looked at in relation to the position among our EEC partners. For example, the total number unemployed in the Community rose by 7 per cent between the end of June and the end of July this year, as compared with 4½ per cent in Ireland. The corresponding increases in unemployment in the UK were over 14 per cent, Belgium over 18 per cent, in Luxembourg 13 per cent, in the Netherlands nearly 12 per cent and in Germany over 9 per cent.

While the results of present investment and job creation policies are consistent with the early achievement of full employment, the repercussions of the recession on the economy are giving rise to high levels of redundancies and job losses, particularly in the older manufacturing sectors.

For that reason the Government, within the terms of the proposed national understanding, have undertaken to launch a series of additional measures and to allocate extra resources to boost employment still further and to curtail job losses. We do not underestimate the magnitude of this task, but we are determined that no effort will be spared to safeguard existing employment and to provide the additional jobs needed to cater for our unemployed and for our young workforce.

As Deputies are aware, the public service is by far the greatest single employment sector in the community and the pay bill is running at nearly £1,500 million a year. The new pay agreement will increase this massive bill. Each percentage rise in the public service pay bill throws an extra load of £15 million a year on the Exchequer's finances. In view of the size of the standard increases under the draft pay agreement, the Government expect that great restraint will be exercised in the pursuit of claims for special increases. During the past two years the amount of special pay increases which were negotiated over and above the standard increases of the national agreements were very considerable indeed. So far as the public sector is concerned, the public who have to pay this bill will find it difficult to accept that there should be any further significant increases under the terms of the new draft agreement.

A key element in safeguarding and expanding employment is our capacity to maintain or improve our competitiveness. This requires a conscious effort to improve productivity. The Taoiseach in his address yesterday referred to the need for increased productivity as provided for in the provisions of the draft national understanding.

I would also stress the importance of productivity as an element of our competitiveness in the world market. It will help safeguard the jobs of those at present in employment and increase the employment prospects of our job seekers. It will ensure the competitiveness and viability of firms and make their products more attractive at home and on the export market. Increased productivity is an obvious practical way in which every Irish worker can contribute to the preservation of his or her own job. We will be having consultations with both sides of industry on ways and means of raising productivity as a national objective, so as to maintain and promote the competitiveness and efficiency of Irish producers and manufacturers.

Another crucial factor affecting employment prospects is the industrial relations climate. It is vital that the commitment to industrial peace in the proposals be scrupulously followed by both sides of industry. This will call for a much greater degree of discipline than has been apparent in the past. The number of days lost through strikes during the first nine months of this year was approximately 375,000. This figure, while still at an unacceptably high level, shows a considerable improvement on the figure for the same period last year when about 1,400,000 days were lost. It also shows a significant drop on the comparable figure for 1978 which was over 436,000. It is in the interests of every individual for the sake of the community as a whole to strive to secure a greater improvement in this area.

One very serious development which has been noted this year is that unofficial strikes account for a much higher proportion of the days lost compared with previous years. This trend poses a serious threat not only to the smooth running of the economy but also to the authority and influence of the trade union movement and to authority as a whole. It goes without saying that, if the production and distribution of goods and the maintenance of essential services are too often interrupted by industrial action, employment will be jeopardised and some jobs irrevocably lost. Our reputation abroad as a location for foreign investment will be damaged and our own efforts to secure full employment will suffer. We cannot afford the luxury of self-inflicted, self-destructive industrial strife if we are sincere in our professed concern for the unemployed and the welfare of our community, particularly young people.

The refusal by some groups of workers to use the agreed procedures or to avail of the services of the dispute-settling institutions and also the tendency to have recourse to strike action as a first instead of as a last resort to resolve disputes cannot be ignored or condoned. To do so would be tantamount to allowing ourselves to submit to a regime of industrial anarchy.

Both sides of industry—the employers and the trade unions—have always professed a strong preference for free collective bargaining and want the Government to stay out of, and keep away from, the operation of that system. The attitude of both sides has always been, and still is, that employers and workers should be free to regulate their own affairs.

If employers and trade unions want no third party involvement in this area then the community at large have a right to expect that both sides will so regulate their affairs that there will be a minimum of conflict and that industrial relations will be conducted in a manner which will advance the common good and impose the least hardship on the community.

Employers must at all times maintain dialogue with the trade unions and workers to reduce possible areas of conflict. Trade unions and their members for their part must honour agreements freely entered into and abide by the rules and procedures voluntarily negotiated and agreed. There can be no order in a situation where any individual or self-appointed group can do their own thing and press their own demands by kicking all the rules out the window and tearing up agreements entered into on their behalf. The removal of this cancer of unofficial action is essentially a matter for the trade unions themselves and trade union leaders must recognise this. If the trade unions cannot tackle this problem then obviously the Government have a duty to consider their options for dealing with it.

In a situation like the petrol dispute where an essential service was placed at risk by industrial action there were loud calls on the Minister for Labour to bring in legislation to outlaw unofficial strikes. It is not, however, that simple; if it were, all the western democracies would have promoted such legislation long ago. There is no law that can prevent a worker from withdrawing his labour or which can, compel a man to work if he does not want to. I am not saying the law cannot help: what I am saying is that legislation on its own will not and cannot provide a solution to unofficial strikes. Any legislation introduced to regulate our industrial relations must be done with consultation and agreement with both sides of industry, if it is to work. As part of the proposals in the non-pay section of the national understanding I propose to have discussions with both sides of industry with a view to introducing some amendments to the law to help deal with some problems and deficiencies in the present conduct of industrial relations.

The Government consider worker participation an important aspect of relations between employers and workers and we are committed to the promotion of meaningful participation by workers in the decisions affecting their working lives. Sometimes the real problem behind disputes is the worker's sense of frustration at not being able to relate to or influence his or her working environment. Therefore, any contribution which participation can make to remove sources of discontent and help towards improving our industrial relations would be welcome.

Deputies are aware that my Department published a discussion paper on worker participation earlier this year. My purpose in doing so was to promote and stimulate all concerned to formulate their views on the subject of participation. I have extended the time for submissions on this document to the end of the year at the request of a number of interested organisations.

The Worker Participation Act designated seven State-sponsored bodies for employee representation on their boards. Six of these have already held their elections. The remaining company, Aer Lingus, are to hold their election early next year. I propose to extend the principle of employee participation at board level to additional State enterprises and will be discussing shortly with Congress those companies which are the more suitable for this type of board representation. The monitoring of the Act so far by the European Foundation for Living and Working Conditions and the Irish Productivity Centre will be taken into consideration so that the procedures for election and the role of elected directors can be improved.

The Government have continued to give attention to improvements in the affairs of women in our society. A delegation which represented the Government at the World Conference of the UN Decade for Women in Copenhagen in July 1980 included representatives from the Employment Equality Agency and the Council for the Status of Women, two organisations to the forefront in promoting improvements in women affairs. The conference was a very important occasion in that it assessed the progress made during the first half of the decade, and formulated a plan of action for the next five years. The delegation was led by the Minister of State at the Department of Labour, Deputy Daly.

The Employment Equality Agency is of course a statutory body whose on-going task is encouraging the elimination of discrimination and the promotion of equality of opportunity in employment. The Government's backing of a research project on the "Sex Differences in Subject Provision and Student Choice in Irish Post-Primary Schools" enabled the agency to secure funds from the EEC. The agency, who have commissioned the ESRI to do the research, sees the project as significant in eliminating discrimination.

The Council for the Status of Women is representative of over a quarter of a million women through its affiliated organisations and is regarded as the main voice on women affairs in Ireland. In recognition of this fact, Ministers promoting legislation or issuing discussion documents on matters concerning women will consult the council at the appropriate time. In addition, the Government have recently provided the council with office accommodation at State expense.

The Minister of State at the Department of Labour has initiated a review of the recommendations in the Report of the Commission on the Status of Women which have not yet been fully implemented.

One of the recommendations of the Commission on the Status of Women which remains to be implemented relates to the provision of maternity leave. It is the Government's intention to introduce shortly legislation guaranteeing women the right to a minimum period of maternity leave following which they will be guaranteed the right to return to work. Provision will also be made in relation to pay during the period of leave in question. There are about 60,000 married women in the age groups concerned and the legislation will benefit about 10,000 of these each year. This legislation is important from a social point of view in that married women should not be penalised for the contribution they make to our society as mothers. There are also strong economic arguments in that the legislation will help to ensure that when women get married their skills and talents may not be lost, as this legislation will provide an incentive for them to return to work should they wish to do so. My Department have had consultations with both the ICTU and the FUE and there has been general agreement on the general approach proposed.

In the White Paper containing the Programme for National Development 1978-1981 the Government committed themselves to the principle of using servicetype employment as an instrument for regional development and for reducing the serious imbalances in employment that exist between different parts of the country. The programme envisaged the transfer of at least 2,000 officers to about eight medium-sized urban areas in the provinces. In addition, the programme recorded the Government's decision that all new Government-sector services would be located outside Dublin unless there were compelling reasons to the contrary.

Since then the Government have been giving serious attention to this matter. After full consideration they have now decided on steps to locate a number of specific Government services in some 12 provincial centres. The number of staff involved will be over 3,200, a figure significantly higher than envisaged in the White Paper. The desirability of pressing ahead with the programme has been given added urgency by the recession and by the falling-off that has occurred especially in the building and related industries.

The contribution to job creation that could be provided by a decentralisation programme is, in fact, recognised in the draft national understanding. For the programme to make an early impact on employment it is essential that construction of the necessary accommodation should get under way as a matter of urgency. The Government will be calling on all concerned, including local and community interests, for their co-operation in the carrying into effect of the decentralisation programme. As the programme involves the movement on a voluntary basis of a large number of staff, I must stress the great importance the Government attach to the support the staff and their staff associations can give to making the arrangements go smoothly.

The Government are confident that this major programme will contribute significantly to the achievement of a more even and equitable development of the less well-off regions in all parts of the country. The programme should also, together with the many other job-creation proposals already announced, do much in the short term to help the building sector and its ancillary industries. The creation of so many new jobs around the country will have a multiplier effect on local trade and employment. Indeed, I would hope that in many centres it would provide the impetus to the provision of rented housing and comprehensive redevelopment. Last but not least, Government services will be brought closer to, and be better integrated with, the people in whose interests they are provided.

The Taoiseach has already stressed the very large investment required for the various projects and the corresponding need, in view of the existing level of Government borrowing, to encourage the private sector to participate in the funding of these desirable projects. I am confident that developers and financial institutions will be interested in the financing of the decentralisation programme and I hope that this will enable much more rapid progress to be made with it.

I have made arrangements for the civil service staff associations to be informed this afternoon of the details of the Government's decentralisation proposals. I can assure the House that, in making their decisions on the places to which civil service offices will be decentralised, the Government have tried to achieve as broad a geographical spread as possible having regard to the capacity of the various places to absorb smoothly the staff involved and also taking into account all the relevant factors such as housing, schools, amenities, local employment situation and the potential for development. The centres concerned in the decentralisation programme are Athlone, Ballina, Cavan, Dundalk, Galway, Killarney, Letterkenny, Sligo, Waterford and the Limerick-Nenagh-Ennis area.

Of course, there are also expanding accommodation requirements for staff in public services already located in other centres outside Dublin—and I should mention Cork as not least among these centres—which will involve major construction work in these places as well.

I have outlined the positive approach this Government are taking in the key elements of manpower, industrial relations and its commitment to a progressive social and economic policy which is designed to provide employment and a better living and working environment for all our people.

Mr. Quinn

: Having listened to the conclusion of the Minister's speech one would not be sure whether one was at a debate on a motion of confidence in the behaviour of the Government or whether one was at an enjoyable open day at Davitt House. What the Minister has said about his Department is of interest. The promise is more than the actual performance, but it does not answer the central question—the Minister did not try to and that is part of the problem of having prepared speeches to read out—raised in the debate. The motion moved by the Taoiseach yesterday is short and straightforward. It states:

That Dáil Éireann re-affirms confidence in the economic policies of the Government and expresses approval of the measures being taken by them to mitigate the effects of the present world recession, to expand employment, to assist the agricultural industry and to promote general economic development.

That is what is at issue today and not the scattering or decentralisation around the country which has been promised ad nauseam but which we have still to see. It is the performance of the Government that is on trial today. If the country at large could listen to this debate our people would ask for details of the economic policies of the Government and the basis on which they are to be measured or assessed. The economic policies of the Government—we have only had one Government since 1977, albeit a coalition of the two factions within Fianna Fáil—were set out in the now infamous manifesto.

That manifesto stated that it "has been carefully put together and costed for implementation in Government by a new team under Jack Lynch as Taoiseach". The manifesto further stated:

The action programme outlined above is designed to produce a major improvement in our economic fortunes. It will lower inflation, cut unemployment dramatically and then restore stability to the Government's own finances through a crash programme for raising output, and boosting home and export sales of Irish made products.

The promises in that contract document were unveiled on 20 May 1977. That document stated that unemployment would be reduced successively by approximately 80,000 over three years. That should mean that if Fianna Fáil had maintained their contract the unemployment level should be 30,000 to 40,000 persons. The manifesto claimed, promised and contracted the Government in a carefully costed document—to quote the document—that prices would only increase by 5 per cent, that economic growth this year would be about 5 per cent and that borrowing requirements by the Government in order to finance this programme, expressed as a percentage of GNP, would be 8 per cent in 1980.

There was no mention in the proviso that the promises were subject to world recession, subject to the Ayatollahs of this world and bearing in mind the arbitrary nature of some unofficial strikes. There was no such caveat in that carefully costed document.

The position today is represented by a very hard and cruel balance sheet. If the Government had delivered what it promised it would be able to point to an unemployment register of 30,000 or 40,000; instead, seasonally adjusted it stands at 110,000. Economic growth instead of being the 5 per cent promised is only I per cent. Prices are up 50 per cent in the period since the Government came into office. Finally, borrowing as a percentage of GNP instead of being the 8 per cent solemnly and formally promised in this document now stands at 14 per cent. Either the English language means something or it does not. If it does mean that if somebody promises to do something on the basis of a series of economic policies and proposals and after a period of three years when a review is made of the effectiveness of those policies and we can measure the starting point from which those policies were inaugurated against the present situation and measure the forecasts solemnly put about by the various supporters of the Government—first in Opposition on 20 May when this thing was unveiled—up to now, we are left with absolutely no rational alternative but to conclude that the economic policies of the Government by their own criteria have manifestly and dramatically failed.

I suggest formally to the next Government speaker that instead of reading out some civil service drafted script he might actually respond to that debating point because this is an economic debate in a legislative chamber and not in some gallery for the parading of press scripts. We are being formally asked to give a vote of confidence at 3.45 p.m. tomorrow to a Government that claims that its economic policies have worked despite all the evidence. It promised something quite specific; we can measure the gap between what was promised and what is there and that gap is enormous. If this were a court of law and we were disputing a contract between a contractor and a client the court and jury would have no option but to deem that the contractor, the Fianna Fáil Party and Government, had grossly defaulted on their contractual obligations. In fact, the judge would have to direct the jury so to find.

In that context I find it extraordinary to have sat through and listened to the waffle of the Minister for Labour who did not address himself to the central problem. In a sense this debate is a year too late; it is of a year past. In reality this very economic debate took place around this building and if we believe what we read in various monthly magazines, in various hotel bedrooms, foyers and bars in the autumn of 1979. This debate took place within the Fianna Fáil coalition itself in private and behind closed doors. Despite the public pronouncements of somebody like—and he is in the House today—the Minister of State, Deputy McEllistrim and despite the guerilla raid on the Republican credentials of the then Taoiseach, Deputy Lynch, the real debate that took place in Fianna Fáil this time last year was not about helicopters flying over the Border in County Monaghan; it was about the failure of the economic policies of the then Finance Ministers in the Fianna Fáil Government. The farce is that there was a vote of confidence at this time last year and the Ministers of the day lost it and the people who voted them out—if we can believe press reports—like the Minister of State opposite—actually voted against the then Minister for Finance and his colleague the Minister for Economic Planning and Development and the Minister for Industry and Commerce and in apparent rage fired them or enabled them to be fired. Having done that, they will come in here tomorrow at 3.45 and vote fundamentally and diametrically in a direction opposite to that voting which took place in the Fianna Fáil Party this time last year.

The present Taoiseach displayed his confidence in this manifesto by firing the Minister for Finance from Finance to the post of Energy, by firing the Minister for Agriculture, by firing the Minister for Economic Planning and Development and abolishing his Department and by firing the Minister for the Gaeltacht. Subsequently, in drawing up the membership of the election committee for the Fianna Fáil Party for the coming year and the coming general election he very publicly and decidedly excluded from membership of that committee the person who was very much identified with the 1977 manifesto and the pre-election preparations at that time. I refer to the ex-general secretary of the Fianna Fáil Party.

That is some confidence—four Ministers gone, one Department abolished, the general secretary who came up with the manifesto idea gone. According to himself in an interview about the time of his enforced resignation he had put the idea of the manifesto in the first place to the then Leader of Fianna Fáil. He is removed from the election committee for the forthcoming election. A majority of the Fianna Fáil Dáil Members voted no confidence themselves in their own economic policy. We on this side of the House are being asked to vote confidence in that policy at the end of all this charade. When the corridors of power from here to Mount Street are littered with casualties of last year's palace revolution or alternatively are crowded with the State cars of additional Ministers of State, we are being asked to vote confidence in that economic policy. It would be amusing if it was not terribly sad and ironic if it were not very costly—because we shall have to pay for this nonsense and the Irish public are now paying for it. Instead of some kind of honest response admitting mistakes, recognising that there are factors over which no Government in an open economy has control, we get the PR screed of nonsense we have just had from the Minister for Labour in which the central issue of this economic debate was not even touched on. Instead we get more crumbs such as decentralisation to Letterkenny and last but not least, to quote his own phrase, to Cork—where else?

The contract as promised in 1977 was endorsed enthusiastically by every Fianna Fáil party member—some of them never thought they would have to implement it, which probably meant that they endorsed it less critically than they would have done otherwise—and significantly endorsed by the present Taoiseach on RTE 1 on the Sunday before polling day. That manifesto bought the votes of the Irish people unwittingly or wittingly—perhaps out of a sense of despair or depression feeling that having come through one depression with the 1973-74 oil crisis anything would be better than returning to the black days of that experience. Consequently they were made an offer they could not refuse, to quote a phrase used. Rather than being the solution to our current problems, that manifesto has been adjudicated by independent economists and observers as being an additional cause of our existing structural problems. In an article by Paul Tansey in The Irish Times today it is stated:

The unnecessary fiscal expansionism of Fianna Fáil from 1978 onwards was the consequence of that party's successful bid for the loyalty of the electorate during the 1977 General Election. Again, very large budget deficits were funded by still further borrowing.

The EEC Commission's report deals with the outlook for this year based on the performance of economic policies announced in the manifesto in the last three years and states:

The outlook for growth in Ireland in 1981, as in the Community as a whole, is not encouraging. Although the current account of Ireland's balance of payments improved in 1980, the deficit is still expected to be large.

It goes on to argue that the borrowing requirement, expected to be 13 per cent of GNP—we know now it will be much higher—is too high and should be reduced significantly.

Therefore, it is fairly clear to every economic adviser and everybody here that the level of borrowing that we have taken upon ourselves or voted ourselves into has reached an unacceptably high level, not as Deputy Ryan said because there is something intrinsically wrong with the principle of borrowing but because of the way in which we are utilising the funds we borrow. The day of reckoning must come for this economy and consequently for our people.

Can this Government learn from the failure of their economic policy in the last three years? Is there any evidence to suggest that the Fianna Fáil majority coalition in this House have learned anything more than simply to depose one leader and replace him with another and depose one set of economic Ministers and replace them with others but maintaining basically the same policies, or endorsing the same policies? Has anything been learned by the Government from the fiasco of the past three years in terms of the current state of our fiscal borrowing?

One of the saddest things I have had to see in my time here was the object defence by Deputy O'Donoghue of the economic policies of the Government. Deputy O'Donoghue himself having been sacked for trying to implement those policies in the first two years. If we cannot learn from the mistakes that have been made and the pressures that must inevitably strike at a small open economy like ours over which a sovereign Government cannot be expected to have any great degree of control, we will have wasted a major opportunity in this debate. It is up to the Government speakers, particularly the closing speaker, to give some indication that the bitter lessons to be learned from this experiment have been learned and that some remedy will be employed in the future.

The Leaders of Fine Gael and Labour made their critical analysis of the performance of the Government. Both suggested possible short and long-term remedies that could be employed. However, proposals have not come from the Government. We have not heard from them specific short-term proposals as suggested in Deputy Cluskey's speech. There have not been suggestions about areas in which there could be reformation or restructuring. Instead, we have been given the public relations brief delivered by the Minister for Labour and the Public Service who spoke about more decentralisation and more job programmes, without dealing with the problems confronting us now. If we do not learn from the Government's economic failure we will be poorer as a nation.

One matter that must be examined sharply and deeply is the use to which finance borrowing is being put in the economy. We have reached the stage when apparently we are borrowing simply to pay wages and current account costs but we have not got any evaluation of what the productive return will be on that borrowing. There seems to be a desperate recourse to borrowing by the Government every time their expenditure appears to get above its revenue. Rather than re-introducing some of the taxes they abolished in their regrettably successful effort to buy votes, rather than extending or broadening the tax base to make it more equitable, or to collect taxes more efficiently, every time the country is hit by increased costs, whether from external or internal factors, or a combination of both, the solution seems to be to borrow from external sources in the hope that somehow everything will turn out right in the end.

In addition to borrowing to cover the current account deficit, there has been borrowing for capital programmes, some of which are in the public sector. Approximately £400 million has been borrowed by various semi-State bodies, which in effect means that the State must pay because the State must act as final guarantor even when the State companies borrow directly themselves. In terms of economic competence or good management there is no evidence to suggest that the Government have the capacity or the willpower critically to evaluate the viability of the capital programmes put up by the State sector and the probable rate of return that will result from moneys borrowed.

At the moment, the Joint Committee on State-Sponsored Bodies are investigating the performance of NET in the Marino Point saga. There is no evidence there that the Government are effectively monitoring the way in which capital moneys are being expended or the viability of the capital projects which by their nature and their size will require recourse to borrowing both at home and abroad. I should like to think that the economic community in this country, and by that I mean the journalists and commentators who have attempted to force upon decision-makers like ourselves the recognition of the very major crisis confronting our public finance and in particular our fiscal policy, would recognise that something will come out of this debate other than haranguing from this side of the House or public relations type speeches from various Ministers about their Departments. Beyond and above those two inevitable components in a debate such as this perhaps there will emerge a commitment within the House to evaluate critically the use to which borrowed capital sums are being put.

In many cases the whole performance of monitoring and evaluation is extremely uneven in those sectors of the economy for which the State has direct control. It is doubly important that this be done. It is important to ensure that no more major mistakes are made. There must be no unnecessary waste or no waste at all if that is possible. Secondly and more fundamentally as far as the Labour Party are concerned, it is important that this lesson be learned because if it is not, the credibility of the State sector as a major agency for economic growth and development will be undermined not by people on the left, not by a socialist administration attempting to implement socialist policies, but by incompetence from a right wing capitalist administration. That would be the worst of both worlds. That prospect is a real one because it has happened already. That lesson should be carefully studied and learned.

Three years ago when this House came back after the last general election in the euphoria of having gained 84 seats and in the natural enthusiasm coming from an election victory and the attainment of office by individual members. Fianna Fáil unanimously and enthusiastically supported the economic policies of the then Ministers for Economic Planning and Development and Finance. In essence that policy was to cut taxes including the wealth tax which was not promised in the manifesto, to borrow heavily and scatter the money throughout the economy particularly in the private sector in the hope that it would generate economic growth that would enable that borrowing to be repaid.

At that time the Labour Party, and I as one of its spokesmen, repeatedly said that there was no factual evidence to suggest that the economic policies pursued by the Ministers for Economic Planning and Development and Finance with our money would create such growth. The economic recovery from the first oil recession had started to take place and there was no need for that kind of gross expenditure within the economy on the scale envisaged and implemented by the manifesto.

At a subsequent stage there was the failure of the housing programme to provide houses particularly in the local authority sector for those who needed them. I recall speaking in a debate with the then Minister for the Environment. We agreed that the industry was overheated and this was done by Government policy with borrowed money to the extent that the private sector had inflated the price of labour and some materials to such an extent that lumping was the norm of the day on building sites and wage rates were in telephone numbers as far as some individuals were concerned. The detrimental effect of that policy was that the local authorities were not able to get contractors to complete their contracts in time because of a scarcity of labour and people who could not afford the inflated prices of private housing were left for longer on the housing list.

What has been the effect of the overheating in the construction industry at that time? It is now in a worse state than it was in 1977. The collapse this time of some sectors of the private house building industry is more critical and fundamental that it was in 1977. As someone in the business I know that 1977 was a bad year for the private house building sector. The Government policy of throwing borrowed money at the problem in the hope that some of it might stick and generate some kind of growth has had disastrous effects in some areas. In the building industry it has caused grave disruption. Many house builders who went through the inflationary impact of the last boom in the industry are now confronted with major problems which the Minister for the Environment has got submissions about.

If one can take any reading from the plans across the divide of the House the demotion of the Minister for the Environment to the Department of Defence can be seen as an indication within Fianna Fáil that that Minister's performance was far less than what the country and the industry required. That view has been expressed by many loyal supporters and members of Fianna Fáil who happen to be in the construction industry.

The theory of borrowing money from abroad or within the economy and having a deficit is based on the idea that one borrows in bad times in order not to deflate the economy too much and to cushion the impact, but one repays or reduces to zero borrowing in good times in the hope that over the full cycle of economic swings and roundabouts, particularly those that affect an open economy such as ours, one will have maintained an even balance. Instead this Government with their professor of economics sought to put that generally accepted theory on its head and borrowed, as Paul Tansey said, at a time when the economy did not need an additional injection of capital. The net effect of that is that we can no longer effectively borrow on the scale needed to cushion the impact of the recession. Our economy has been damaged to the extent that the debt liability per person is enormous and the servicing of that debt will be difficult.

On top of that relatively simple economic proposition the level which our borrowing has now reached in terms of its proportion to the size of our economy is such that the value of our own independent currency is beginning to come under considerable stress and the decline in the value of the IR£ cannot be ruled out. That decline will be forced upon us by its downward movement within the EMS. As Deputy R. Ryan pointed out, when the £ sterling starts to readjust to a more realistic level of value for itself, that in turn will reduce the value of our own £.

One side effect of this Government's in the main non-productive borrowing has been that we can anticipate—without being optimistic about it because it is not an optimistic prospect—that our own currency will be forced to devalue. That in turn will mean, particularly for our foreign borrowings, that we will have to pay back more than we anticipated paying in the first instance because of the reduced value of our own currency.

I have five or six minutes left and I would like to conclude by saying to the Government Ministers present that much of our problem set out now and discussed—not necessarily by me in a partisan manner—has been brought about by the belief in this nonsense document of the Fianna Fáil manifesto. That worked in terms of winning an election and nobody can argue with that. It got the votes and it won back power for Fianna Fáil, but it was not then and is not now a credible economic policy. I urge strongly that, rather than hanging on for another 18 months pretending that they are still following it out and having the spectacle of a sacked Minister for Economic Planning and Development pledging loyalty to a man who fired him and abolished his Department less than 12 months ago, the Fianna Fáil Ministers, Government and majority in this House will not do further damage to the economy by carrying on for another year and a half. Whoever comes back into office after the next general election is going to face a very bare cupboard. The Members opposite have demonstrated their political inability to grasp nettles, to increase or extend the taxation base in order to get additional revenue for services that the public want. They have refused to do that. In the obsession which the Taoiseach has with not only being popular but with winning every kind of dog fight and election the temptation to promise more, to borrow more and to expend more, supported enthusiastically by the majority faction within the Fianna Fáil coalition, is going to be considerable. I say solemnly to the House that the money that they borrow and spend is not their money, it is ours. It belongs to the Irish people and it is borrowed in our name and is spent by the Government in order to buy the Irish people's votes.

If the Government, having fired the Minister for Finance and the Minister for Economic Planning and Development less than 12 months ago, are so confident of their present economic policy, why not take it to the people immediately? Why not tomorrow evening, when 82 or 83 Deputies vote in favour of this motion, dissolve the House and instead of having a by-election on 6 November and let us have a general election on 6 November and let the people decide whether the confidence which Fianna Fáil undoubtedly will express in the economic policies of this Government tomorrow evening at 3.45 p.m. is shared by the people? That is the real measure of just how confident they are in the economic policies being pursued now and enacted over a period of three years by this Government. If they are so confident, the test is not taking the minority and majority factions in a display of loyalty up the staircase here and into the Tá lobby. That has already been signalled in a rather sad performance by Deputy O'Donoghue yesterday and it will be no surprise. The real test of confidence is to continue walking out of this House into a general election, and they should do that without any further delay. The real vote of confidence on the economy took place inside the walls of this building less than 12 months ago when the author of the economic policy, the then Taoiseach and the Minister for Finance were ousted from power by the majority faction in Fianna Fáil who were not fighting about republican issues but fundamentally and ultimately were concerned with the then perceived failure of the economic policies of the Government and they wished to change them. The economic vote has already taken place within Fianna Fáil. If they have the courage of their own convictions they will carry this vote out of this House to the general public and put it to the true democratic test.

Minister for Agriculture (Mr. Mac Sharry)

: I propose to confine myself to the agricultural sector and I intend to deal in particular with the problems being experienced by that sector as a result of the current economic recession and with the steps that the Government have taken and will be taking to deal with those problems.

Before I do there is one matter I wish to raise. Yesterday in this House Deputy G. FitzGerald referred to some newspaper reports that the leaders of the farming community were threatened and intimidated when they met with members of the Government last Friday. The Deputy stated that they were warned that, and I quote, "there would be no more goodies for them unless they behaved themselves between now and November 6".

For the Deputy's information and for the information of the House, I was one of those present at that meeting and I can categorically state that no such threat, or indeed any threats of any kind, were made there. I challenge Deputy FitzGerald to check his facts with any farmer representative who attended that meeting. Our Government does not resort to the type of actions which seem to occupy the imagination of the Opposition. Deputy FitzGerald enjoys the reputation of being an honourable and a fair man. I would ask him now to have the honour to withdraw his remarks of yesterday. I would further ask him to apologise to the leaders of the farming community for the implied naivety with which he credited them by suggesting that they would succumb to threats, veiled or otherwise. In my many dealings with the farming sector I have found their leaders most diligent and motivated by a genuine concern for the farming community. This concern is shared by the Government.

To return to the motion before the House, let me emphasise that the Government are neither unaware of nor insensitive to the problems being experienced by the farming community. They readily recognise that there are problems and in the various measures announced over the past month they have shown in a positive way what they are prepared to do to help farmers to overcome their problems.

The current year has been a difficult one for farmers; both the physical climate and the economic climate have been unfavourable. The wet summer had two major consequences: first, the amount of winter fodder was affected and the quality of much of it was below normal standard: secondly, the cereal harvest was badly affected with a lot of grain being harvested in very wet condition. This again has led to quality problems. In relation to the fodder difficulties, the Government met the farm organisations and then took swift and effective action. The fertiliser, silage and fodder subsidies which we introduced in August have been most successful, and many farmers who would otherwise have been badly caught for winter feed are now in a much happier position. Fertiliser use increased substantially and there was a big increase in the number of farmers making autumn silage as compared to last year.

The weather problems of recent months have accentuated the economic and financial difficulties. These difficulties have their origin in the general world economic recession and in the fact that our rate of inflation here has been much higher than the price increases that have been realised by farmers. The prices farmers have to pay for their inputs and their costs generally have continued to rise, and there has been an inevitable cost/price squeeze on the agricultural sector.

That is not to say that real and tangible progress has not been made in the agricultural sector. Much of this progress has gone unnoticed in the current debate on farm incomes. We have forgotten very quickly the situation we were confronted with before and during the prices negotiations at the beginning of the year.

One of the main objectives of the common agricultural policy is to ensure a fair standard of living for the agricultural community. I do not honestly think that there is anyone who will dispute the fact that the CAP has brought considerable benefits to Irish farmers through improved and unrestricted access to markets, and participation in the Community's price support system.

It is worth noting that prices in the Community are considerably higher than those available to producers in most third countries which have to rely on world market returns for their produce. Now, however, with the increasing pressure from consumer interests and the preoccupation of certain member states with the level of the Community's expenditure on agriculture, increases in prices at EEC level are not easily secured. This was certainly the case with this year's price negotiations which were long and extremely difficult from our point of view.

In the end, however, the compromise package which emerged was a reasonably satisfactory one under the circumstances. It did not give us all we wanted or sought in the Council but compared with what seemed likely at one stage, it represented a significant improvement. The Commission's original proposals were for an overall increase of 2½ per cent in prices with an even smaller increase suggested for the milk sector. Even though the final price rise agreed was less than what I would have wished for, it nevertheless represented a considerable advance.

Equally important from our point of view were the Commission's proposals for dealing with farm surpluses and restraining budgetary expenditure. These included measures which, if they had been implemented, would have had a particularly serious impact on our agricultural industry and stifled its long-term development. The super levy on milk would have had major implications for our dairy industry. It would have discriminated against us because our dairy industry, with its low milk yields, has not attained anything like its full potential.

The proposals to suspend beef intervention during the summer months was also most disturbing. I have often said that I deplore over-reliance on the beef intervention system and I have urged our factories to concentrate their marketing efforts to a much greater extent on commercial outlets. Nevertheless, a complete close-down on intervention buying for the considerable period proposed would have been a drastic step and would have had a most unfavourable impact on prices to cattle producers. That is why I flatly opposed these proposals with the full backing of the Government, the agricultural industry and the farmers.

On the structural side the price negotiations brought some real gains. The western package was adopted by the Council of Ministers and represents a very substantial injection of assistance for agriculture in the western counties. It means that up to £300 million will be spent in the area over the next ten years. I am confident that this scheme will entail real progress for agriculture in the west of Ireland and will ensure that by improving infrastructure the standards in agriculture can be raised to levels more comparable with those in other parts of the country. Work is well advanced on the preparation of a detailed programme for submission to the EEC Commission and consultations are taking place with interested organisations. My intention is to have the new programme in operation from 1 January next. Indeed the higher FEOGA grants for processing and marketing projects in the west have already been introduced.

The new programme will cover such aspects as improved water supplies, the development of rural electrification and the provision of an adequate network of roads. Schemes are also being worked out to encourage land improvement through commonage division and reclamation. Attractive grants will be provided for these purposes. It is also intended to provide encouragement to beef producers in the west to improve production through a calf to beef system. Furthermore agricultural education facilities in the area will be expanded and a programme of forestry development will be introduced.

Already one aspect of the package has been introduced. EEC grants of 50 per cent are now available under the FEOGA Scheme for processing and marketing projects in the west of Ireland. This compares with a grant of 25 per cent under the existing scheme and is in addition to the national grant of up to 25 per cent. Thus a project can be grant-aided by as much as 75 per cent. As I have said, this package represents an impressive package of measures for the development of agriculture in the west. The beef suckler scheme, to which I will refer later, was also negotiated as part of the price settlement.

Recent developments at EEC level have seen the completion of the common policy for sheepmeat. This policy has been the subject of long and sometimes acrimonious debate extending over several years. During that time our sheep industry suffered from uncertainty although our access to the French market in recent years was of immense benefit. The completion of the sheepmeat policy represents a very definite achievement. It means that our sheep industry can now face the future with greater certainty and confidence.

Sheep farmers who have hitherto been at a serious disadvantage compared with producers of other products are now on an equal footing with them. They now have as good a support system as applies to other products. In addition, there is provision for a special support to compensate producers for any reduction in prices that may result from the opening up of the Community market. As I announced last week, this will take the form of a headage payment on ewes which should amount to about £7 per ewe in a full year. There will be no limit on the number of ewes eligible for the premium and it will be paid without regard to the producer's income. Apart from this there will be unlimited access to all EEC markets and there will be improved opportunities to develop exports to third country outlets.

In my view, the outlook for the sheep industry is now more satisfactory than at any time over the past few years and I look forward with confidence to an expansion in production. In particular I see improved prospects for the mountain sheep producers especially where adequate attention is given to management and feeding practices. I would urge mountain producers to concentrate on improving the management and feeding of their flocks. With greater attention to these aspects they can derive substantial benefit from the new arrangements.

The support for sheep meat provides for private storage and for intervention. The question of having or not having intervention was one of the most hotly debated items. Some countries, looking at the cost of intervention for products such as beef and and milk, were reluctant to have intervention for sheepmeat and it was only after long argument that they agreed. This again reflects the very difficult budgetary situation being faced by the Community. I would hope that the market will remain sufficiently strong to enable us to avoid intervention. Incidentally, when intervention is used there has to be a cut-off in the amount of the ewe premium; in other words, the compensation through the ewe premium would have to stop at the point where the interventon would take over. However, if intervention has to be used, used it will be, but I do hope that our hopes for a continuing good market will be realised. The first reports we have to hand from the market this week show a heartening increase in producer prices. I hope that this position will be maintained and indeed improved further.

I would also like to refer to some criticism of the arrangements which the Community have made with third country suppliers such as New Zealand and Australia. Any such criticism is not well-founded. It was essential to have agreements with these countries. Otherwise, we could not have had a lamb regulation. The first essential in any common market system for a product is protection for Community production. Because of a GATT agreement made in the sixties imports of lamb were guaranteed for third country suppliers in unlimited quantity and with a bound customs duty of 20 per cent as the sole frontier charge.

The enlarged Community had to accept the same obligations. To enable a common market system to be introduced it had to be possible to limit the quantities coming into the Community and so it was agreed with the supplying countries that they would voluntarily restrict their supplies. In return the Community undertook to reduce the duty from 20 per cent to 10 per cent. Also these countries are agreeing not to send their lamb into sensitive markets in the Community, that is, into France and Ireland. These arrangements with third country suppliers are also due to be reviewed in four years time.

The new regulation also provides for refunds on exports to third countries. I am anxious that these should be available and I am continuing to press the Commission for them. However, it is only fair to say that in the negotiations with overseas producing countries regard had to be had to their fears that subsidised Community supplies would hit them in their traditional markets. This is a sensitive aspect and we have to be careful about it.

Before finishing on sheepmeat I should like to say again how glad we are that we have at last achieved a common market system. It is a workable and useful system and with the benefits it provides Irish producers and processors can look forward to an industry increasing in volume and in prosperity.

We continue to make progress in reducing the incidence of bovine TB and Brucellosis.

At this juncture, the advances made in eradicating brucellosis look particularly encouraging, and in the light of recent trends I have recently decided to extend the full compulsory eradication programme to the entire country. The results from the current round of testing in the 17 counties of the free and clearance areas show the herd incidence to be 2.8 per cent and the animal incidence at 0.39 per cent. These compare with 4.5 per cent and 0.9 per cent respectively at the end of the last round. I am satisfied at this stage that we can look forward to the virtual total eradication of brucellosis from the national herd within five or six years.

The progress in eradicating TB is less spectacular. The first results from the tests now in progress show a marginal improvement on the last round. Nevertheless, the indications are that the last residues of TB could prove difficult to eradicate. An all-out effort on the part of all concerned will, therefore, be necessary during the next couple of years to get on top of this disease.

I have been keeping the operation of the eradication programme, and particularly the 30-day pre-movement test, under continuous review. In this context the first consideration at all times must, of course, be to ensure that there is no disruption of our export trade in cattle and beef. The 30-day test is enshrined in EEC Directives relating to trade and it is not, therefore, open to us to drop it unilaterally. Member states whose own disease situation is much better than ours are entitled to protect themselves against the risk of introducing disease. On this account it is not possible for us on our own to contemplate dropping the 30-day test at this juncture.

I did in fact take a hard look at the 30-day test shortly after I became Minister for Agriculture and decided then to ease the problems being encountered in some cases, especially by exporters of live cattle, because of the 60-day interval required between retests for TB. I reduced that interval to 45 days subject to certain conditions and this has proved a useful concession. I undertook also to ensure that the results of brucellosis blood tests would get back to farmers with the minimum of delay. In so far as the work at my Department's laboratories is concerned that undertaking has been met. There is no delay and the system is working well. I am aware, however, that in odd cases problems are still occuring for various reasons such as delays in despatching samples to the laboratories. I will be taking these problems up again with the veterinary profession to ensure that the interests of herdowners, particularly those wishing to sell cattle, are protected.

I hardly need to emphasise again that the eradication of TB and brucellosis is vital to protect our exports of cattle and beef. Since time is running against us, we have no room for complacency. If, however, we achieve the progress that we ought to achieve we could then consider the possibility of securing some relaxation of the tight regulations that are necessary at present.

There have been other significant developments on the domestic scene. I have shown my concern for the plight of the small farmers by, for example, increasing the level of headage grants. Indeed, as I shall be indicating in more detail later, I have made two increases in the headage rates this year. Early in the year I announced the re-introduction of the Mountain Lamb Extension Subsidy Scheme and here again the rate of subsidy was increased recently. It was in fact doubled—going from £1.50 to £3. The producer price of liquid milk was also increased by 5p per gallon during the year.

As regards the current difficulties in farming, the Taoiseach, the Minister for Finance and I have had a number of meetings with the leaders of the farm organisations. We have not shirked the issues in any way. The measures we have introduced are the real evidence of our commitment and determination to help the farmers in their present difficulties. In particular, we are concerned at the implications these difficulties have for producer confidence, and for future development and expansion of this vital sector of the economy.

Within the existing financial and other constraints, the Government have provided for a range of measures to alleviate current difficulties and to promote renewed investment and expansion in the industry. A major objective of these measures is to encourage expansion of the national breeding herd, particularly in the western counties. This expansion is essential to the future well-being of agriculture and the economy as a whole. Arising out of the Government discussions with the four associated banks about the present position of farmers' indebtedness, the banks indicated that they will take a constructive and positive approach to the restructuring of existing loans on a case by case basis where farmers are faced with serious repayment problems. The banks consider that this, coupled with the recent reductions in interest rates, should substantially ease the position. Following an approach from the Government, the ACC are reviewing the situation of farmers with serious repayment problems and restructuring existing loans, where appropriate, on an individual basis.

At the same time, in order to increase the incentive and facilities for productive investment in agriculture, the associated banks, arising from discussions with the Government, are making available up to £50 million from foreign borrowings. This will be lent to farmers at variable interest rates currently in the range of 13 to 13½ per cent. The types of investment covered will include additional working capital where the farmer's own funds are seriously depleted, the financing of increases in breeding stock, land reclamation and drainage, fodder storage and building for additional livestock and assistance to young farmers taking over holding for the first time. This new scheme, together with that already in operation by the ACC, makes available £100 million for the development of agriculture at rates well below those prevailing today and will give a substantial boost to farmers investing in farm expansion programmes.

In order to ensure that these schemes work effectively, two liaison committees are being established between the farm organisations and the banks and with the ACC. It will be the task of these committees to ensure that the schemes for restructuring and for productive investment operate in practice in accordance with the spirit in which they have been set up.

Investment under the Farm Modernisation Scheme and the Western Drainage Scheme has continued at a high level this year. The Government welcome this as showing confidence by the industry in its future and as a valuable source of employment. The continuing high investment has inevitably put pressure on the system. As much as £15 million extra has been provided to meet outstanding claims for grants which had been approved and for which the work had been completed. This will bring the total expenditure this year to £51.5 million, an increase of more than 50 per cent on last year. All the indications are that interest in the scheme is being well maintained. In fact, the level of approvals so far this year is appreciably higher than for the same period last year. In the first nine months of 1980 the number of approvals issued for new buildings and land improvement projects was 35,700 involving an investment of £126 million as compared with 32,400 approvals representing £112 million investment in the corresponding period of 1979. The substantial increase indicates that farmers have faith in the future of agriculture.

The improved rates of grants which I announced on 1 August, under both the Cattle Headage and Beef Cow Schemes, have recently been increased a second time by £10 to £32 and £28. The new rates will apply to this year's headage payments and are approximately double last years rates of £17 and £13. They will provide a strong incentive to expand the beef-breeding herd and so counter the downward trend which has applied for the past six years or so.

As I said earlier, a beef suckler subsidy was approved as part of this year's price package. This scheme has now been introduced. A grant of £13.18 financed by the EEC will be paid on cows in beef suckler herds in all parts of the country with an extra grant of £12 paid out of national funds on each additional cow in a beef suckler herd. These new measures constitute a further significant encouragement to expand the suckler herd. These measures should ensure a greater degree of security for our beef industry as regards the procurement of raw material. Taken together with the headage grants a farmer in the disadvantaged area can now get as much as £57.18 for an extra beef cow. This is certainly a worth-while incentive.

There is great need for farm relief services especially for dairy farmers. With a view to encouraging the provision of such services on a more organised basis, the annual grant to Macra na Feirme will be increased for five years to enable that body to organise and co-ordinate the establishment of local farm relief services on a group basis. Part of the grant will be to provide for central organisation and administration and part will be to assist the formation of groups at local level. This will help generate new jobs in the rural areas.

The package announced last month also doubled grants under the Mountain Lamb Extension Scheme, as I have already mentioned. This scheme has been of considerable benefit in getting lambs off the mountains for feeding in the lowlands. I believe that the vast bulk of the mountain lambs have in fact been sold off. The package also provided for assistance towards this year's campaign against the warble fly, and is enabling farmers to have their cattle dressed for the same charge as applied in 1979.

Strong representations have been made by the farming organisations about the difficulties of farmers, particularly those in the £40-60 rateable valuation category. As a once-off measure, because of the decline in farmers' incomes the Government have arranged that for farmers in this category the second moiety of this year's rates will not be collected. Also for farmers in other categories, the local authorities will adopt a sympathetic attitude towards individual farmers who clearly have temporary difficulties in meeting their rates liabilities.

These various measures show the determination of the Government to see that the agricultural economy develops in all its sectors. As well they reflect the Government's concern for the farmers' current situation and their willingness to do what is possible to help.

While the prices fixed in Brussels determine the general level of the EEC market, they are subject to the efficiency with which products are processed and are sold in the market place. It is in these latter respects that we will have a substantial leeway to make up. The prices realised for Irish farm products are below those of many of our competitors in the EEC. Of course, our geographical situation imposes additional costs on us, but these do not account for all, or even the larger part, of the difference between prices for Irish farm produce and those realised by farmers in other member states. I am not happy with this situation in the context of our membership of the EEC. The discrepancy in prices is consistently too wide and it is unacceptable that Irish prices should be so low. It is my intention to raise this matter at EEC level in order to eliminate any factors in the management of the CAP which contribute to this situation. On the other hand, some of the difference is directly due to the practices followed at farm level—for example, in the types of beef cattle which we produce. There is also the question of the efficiency with which the produce is processed and marketed.

The main farm products are exported either directly through marketing bodies on which farmers are represented, such as Bord Bainne and the Pigs and Bacon Commission, or are subject to promotion and market development through a semi-State body such as CBF, again with farmer representation. It is vitally important for us to improve our marketing as we need to gain the maximum value from our produce in view of the increasing difficulties in securing adequate price increases at EEC level. No matter how efficient production is at the level of the producer much profit is lost if marketing is not efficently done. We have some examples of efficent marketing and when I say efficient I have in mind, in particular, centralised marketing. We have the case of Board Bainne which engages in centralised marketing in a very efficient manner.

I make this point in order to contrast that situation with the situation in regard to pigmeat. Here I am sorry to say that we have a marketing system which leaves very much room for improvement. Our total availability of pigmeat for export is quite small but nevertheless there are people in the processing industry who insist on exporting comparatively minute quantities of bacon as an independent exercise and without any effort to co-operate with the majority of processors who are willing to conduct centralised marketing. I might also say that those who insist on going it alone are quite prepared to reap on the home market the benefits gained from the co-operative effort of the majority of processors.

I would appeal to those people outside the centralised marketing system to join in the system which is, of course, entirely voluntary. By so doing they would be helping the whole industry not only in regard to the maintenance of the present trade but in efforts to change over to more added-value types of products. The pigmeat industry has been going through a bad time. The main export market in the UK has been weak and the industry has been suffering from the problems that I have referred to earlier about marketing. It is a very important industry and over the years has undergone considerable change especially in the level of pig production.

Production is concentrated nowadays in large intensive units. Similarly on the processing side there has been some rationalisation, though I would add that there may be room for more in order to improve the efficiency in processing. I am very much alive to the present problems of the industry and in recent weeks I have had a number of meetings with the various interests. I have been considering ways and means of helping the industry over its current difficulties and I shall again be meeting all the interests concerned at the beginning of next week.

With a view to furthering the drive for increased agricultural exports, the Agricultural Exports Co-ordinating Group was set up in 1978. The group supplements and co-ordinates the export promotion activities of the existing agricultural export agencies and acts in liaison with Córas Tráchtála. The Government have made available a sum of £75,000 this year to finance suitable promotion projects and this sum has been matched by an equal contribution from the agencies themselves. Most of this money is being used to pay for advertising campaigns for Irish food products in two countries—France and Germany—in which the group had already carried out surveys. Other projects are at present under consideration.

Dairying is the sector in which there has been the greatest development over the past decade. Productivity and output have expanded dramatically with the result that dairying now rivals beef in its contribution to total agricultural output. The value of dairy exports at over £600 million a year is a clear measure of the vital importance of the sector to the economy as a whole. The dairy sector has not, however, been any more immune than other sectors to the adverse effects of recent economic difficulties. High interest rates and inflation affect dairy farmers in the same way as all others.

There is, however, an additional consideration arising in regard to the milk sector. More than any other group, the prosperity of milk producers is affected by the decisions taken in regard to the Common Agricultural Policy. Unfortunately, the substantial surplus in the milk sector—to which admittedly this country contributes only marginally—is causing severe problems and is a major factor in pushing the level of Community expenditure towards the limit of its present resources. It still has some way to go before the VAT limit of 1 per cent is reached but the pressure of milk expenditure is nevertheless greatly influencing the drift of policy.

The only real solution to these problems lies in the restoration of a better balance in the milk sector on the one hand and a re-organisation of the Community's financial base on the other. These developments must eventually come, but in the meantime more short-term and cruder solutions are likely to be put forward. In the price negotiations last spring, I opposed the imposition of a superlevy on creameries which increased their intake or on farmers who increased their deliveries, but an increase in the general levy had to be accepted. This was somewhat less for producers in the disadvantaged areas and the overall effect of the settlement was a net price increase for the industry generally. However, the basic problem in the milk sector remains and, therefore, we can expect further proposals to deal with it. The Government fully appreciate the need to solve the surplus problem but in our view remedial action should not penalise or discriminate against our underdeveloped industry. We cannot and will not accept artificial barriers to the development of the dairy industry in Ireland.

Moreover, action to restore balance should not be confined to Community producers alone. It should also apply to imports from outside the Community. In other words, all suppliers to the Community's market must share the burden of solving the milk surplus problem.

With that approach, I believe it will be possible to reach decisions at Community level which will not frustrate our development aspirations. Accordingly, if we keep our own house in order, we can look forward to renewed expansion in the industry.

For a large majority of Irish farmers dairying remains by far the most profitable farm enterprise. All the information available to us proves that by somewhat better management and higher stocking rates we can dramatically improve output and incomes in the dairy sector. The Government will continue to do all in their power to ensure that the environment, both externally and domestically, is such that this improvement is encouraged. With a sound processing and marketing base, I believe that we can expect substantial development in the industry in the coming years.

This year the problem of obtaining a realistic price for farm products has become much more acute. Prices for most farm products are not as satisfactory as we would like, in spite of all the efforts we have made to realise an improvement. Cattle prices have, however, held firmer in the past month than at this time last year, and I hope that this position will be sustained over the coming months. The level of activity in the cattle and beef industry is higher than last year. So far cattle disposals are up by 36 per cent.

At this time of the year the cattle market generally is, of course, affected by the seasonal increase in supplies of finished animals. This year there have also been the effects of the economic recession. In particular these adverse conditions have affected the price of heifers. On top of these, there have been the British animal health controls which hit the traditional export trade in blue-grey heifers. Because of these factors, some action to help the heifer market was called for and so pending the necessary clearance of the EEC Commission for the resumption of intervention for heifer beef I decided recently that heifer slaughterings by the meat factories should be allowed to count in the weekly calculation of the amount of beef taken into intervention.

I am confident that this alternative measure will have the effect of strengthening the market price of heifers and indeed of steers also, as well as boosting producers' confidence. It is intended only as a temporary measure to alleviate the current weakness in the heifer market. I have made it clear that in taking this step I am conscious of the need to discourage the slaughter of any potential breeding stock. The heifers likely to be slaughtered over the next few months would, however, be slaughtered in any event and would not be used for breeding.

Farm incomes depend upon not only the level of prices and costs, but also the level of output. For this year the present indications are that net output will increase significantly, possibly by 8 per cent to 10 per cent or so and thus regain all the ground that was lost last year. This would come from a small increase in gross output and a substantial saving in the use of inputs, particularly feedingstuffs. While farmers will be seeking to reduce unremunerative inputs, it will not solve our problems if they go too far in adopting low input/low output production systems. The higher net output would, of course, help towards overcoming the problems faced on the prices side.

As regards EEC prices, the increases in recent years have not been at all adequate to compensate for farmers' cost increases. This situation cannot continue. Farmers should receive returns for their products which would maintain their incomes and enable them to keep their enterprises operating at proper levels of efficiency. I can assure the House that I will be insisting on substantial price increases for the coming year. I am confident that there will, in fact, be a more realistic attitude in Brussels on this issue. Several other Ministers of Agriculture will have the same interest as I will have because the current farm income problem is not confined to Ireland but indeed affects most of the Community. At the same time we ourselves must strive to improve efficiency and productivity at all levels from the farm to the market place. The introduction of new grants for ewes and beef cows together with the much higher headage payments under the Disadvantaged Areas Scheme provide a strong incentive to increasing beef and sheep breeding herds. I have no doubt that farmers will respond and increase the numbers of breeding stock. This is crucial if we are to expand output over the next few years.

Considerable investment and improvement has taken place at farm level in recent years. Individual farmers are better geared than ever to take advantage of the opportunities available to them. The investment must be properly applied and not left idle. As I have already said, there has been a substantial increase in applications under the Farm Modernisation and Western Drainage Schemes this year. This shows that there is underlying confidence in the future of the agricultural industry and that farmers are prepared to demonstrate that confidence by investing their own money in the improvement of their holdings.

The establishment of ACOT marks an important development in agriculture. This new organisation is intended to give a greater degree of cohesion and direction to our advisory and education service. I am confident that it will succeed in providing a top-class back-up service to farmers. I have mentioned that we must improve productivity. This can be done by improving yields, the quality of grassland, husbandry methods and a general raising of standards in the whole range of farming activities. ACOT is the ideal organisation to inspire and initiate this transformation.

We have been hearing a great deal recently about the alleged need to reform the CAP. There is always scope for improvement and adjustment of such a comprehensive and complex policy as the CAP but I see no need for radical changes. The policy should go forward, not backwards. Forward progress would, of course, involve some improvements, such as eliminating the remaining monetary compensatory amounts and increasing the degree of preference on the market given to Community producers as against their competitors in the outside world.

The day-to-day management of Community markets is the responsibility of the Commission in Brussels. They are trying to carry out this formidable task in a prudent way within the limits of the financial resources available to them. It is right and understandable that they should do so. But there have been instances where undue restrictiveness about market management threatens to conflict with a basic objective of the Common Agricultural Policy, namely that of ensuring a fair standard of living for the agricultural community. In such instances the welfare of farmers and the need to maintain their incomes at a reasonable level should not be compromised by an over-cautious approach to market measures.

Those who demand basic changes in the Common Agricultural Policy are not thinking of progress. They are thinking rather of dismantling the CAP and reducing its impact to a point where it would no longer have any chance of fulfilling the tasks assigned to it by Treaty of Rome. Some opponents of the CAP are basically opponents of the whole idea of European integration. They would like to see agricultural spending shifted from the Community to the member states and indeed even a return to a cheap food policy based on imports from abroad. Much of this is wishful thinking. The days when Europe could exploit overseas agricultural exporting countries are over.

With the steady increase in world population the day may come when food productive capacity will be as valuable as oil resources. The opponents of the CAP conveniently ignore the effects the realisation of their aims would have in splitting the Community. Even more seriously, they ignore the integrity of the Community's achievements.

It would be very childish to assume that, if farm spending were to be re-nationalised, the free market for industrial goods could remain intact or the powers of the European institutions untouched. Those who seek to shake the pillars risk bringing down the roof; history would judge them harshly. The best interest of Europe—and of Ireland—demand that the wreckers be opposed. Of course, there are problems to be resolved in relation to CAP. Nobody denies that.

At present the inflexible upper limit of 1 per cent VAT contribution restricts the Community's total expenditure. That limit has become a serious barrier to the progress, and even the proper maintenance of the CAP. There is only one answer and that is to raise the expenditure ceiling, thereby providing for improvements in other Community policies as well. Amputation is not a response to growth. The Community's resources will have to be brought into line with its real needs and dimensions. Indeed, it would be irresponsible of us to set up a community of twelve without first having taken this essential action.

The resolution of the problem of Community resources will take some time. This factor will complicate the 1981 farmprice negotiations in Brussels, as it did this year. It is clear, however, that a substantial price rise will be needed to help Irish farmers to meet the income difficulties that many of them are experiencing. I will also want to see a significant cut in positive monetary compensatory amounts next year.

We in this country have adjusted the green rate for the Irish pound so that MCAs no longer apply on our side. But our exports to markets such as Germany and the United Kingdom are still subject to monetary charges in those countries which maintain green rates that are well below their market rates. This position has arisen because of the strength of their currencies and I would hope that as part of the price settlement there will be some worthwhile adjustment which will reduce the MCA charges on Irish exports to those countries.

The need to revise land policy to take account of current and future needs has been a preoccupation of the Government for some time. Changing circumstances in the agricultural sector, particularly since Ireland's accession to the EEC, have highlighted shortcomings in the present land settlement programme and have indicated a need for re-assessment of existing policy.

Preparation of a White Paper outlining the Government's thinking on the necessary reforms is at an advanced stage and I expect that publication can take place within the next few weeks. It is my intention to have discussions with all interested parties on the White Paper and to introduce legislation in the Dáil by the end of the year.

In conclusion I wish to underline once more that the Government fully appreciate the importance of agriculture. We are genuinely concerned with the current difficulties being experienced by farmers. We are very keen to find acceptable solutions to these problems. We have had high level discussions with farm leaders on the situation and we have announced a series of significant measures to provide relief.

The Government are keeping the situation under continuous review and assessing fully the various proposals for alleviating the difficulties. This is being done within the national and EEC context. The Government intend to match their concern for agriculture with as much action as is possible within their capacity. We share a desire with farmers and the agricultural industry as a whole to see agriculture develop and expand for the good of those directly concerned and the economy as a whole.

Mr. O'Toole

: I do not propose to deal at length with the long statement of the Minister for Agriculture. However, I would refer to his opening remarks in relation to Deputy FitzGerald's comment yesterday in the House relating to what went on at the meeting with the farm organisations. I would point out that Dr. FitzGerald was reporting what he read in newspapers which, by the way, had gone undenied up to now by the Minister or by any of the farming groups. I welcome the belated denial by the Minister of any such pressure being brought to bear on farm organisations. In the circumstances there is no reason for the Minister to demand an apology from Dr. FitzGerald or anyone else on this side of the House. I am now commenting on the fact that the Minister for Agriculture has denied this allegation belatedly, because it has been in the newspapers for some time.

A debate of this type affords this House an opportunity to discuss the many aspects of the economy affecting every one of us. We have been treated by members of the Government to three-quarter-hour dissertations on what Fianna Fáil have done and what they now plan to do in a kind of vague statement. The Minister for Agriculture has treated us to a long dissertation on what he has been doing in his Department. What our farmers need, first of all, is a recognition of the pitfalls and the problems, an admission of failure where something has been tried and failed and, more importantly, the offer of some solutions to those problems having recognised them. This is where the Minister has fallen down. He has not been able to offer the kinds of solutions that would satisfy the farming community. Indeed looking back through the sheaves of scripts of Government Ministers since yesterday one is struck by the absence of the kinds of solutions necessary if we are to get over our present economic crisis.

This type of debate affords us an opportunity to discuss these things and make constructive suggestions as to what might be done in an atmosphere of co-operation and understanding. We are talking here about economic and social ills, educational problems, industrial problems, problems across the whole spectrum of the economy affecting every one of us in this House and indeed every Irish citizen today. Hopefully I will concentrate on two main issues concerning the economy, that of financial management which includes prices, and the industrial sector which would cover unemployment and job creation. On the question of prices let me say that this Government undertook three-and-a-half years ago, in a famous document known as the Fianna Fáil Manifesto, sub-titled "Action Plan for National Reconstruction" to introduce measures which would control prices which they maintained had not been done by the National Coalition Government. For a short period that Fianna Fáil Manifesto was a prescribed document which every Fianna Fáil Member of the House—and I am sure outside it—was expected to read and indeed possibly commit to memory. That was in the prescribed days. For some time now we have entered the proscribed days in which I do not think it is now the done thing in Fianna Fáil to refer even to this document known as the Fianna Fáil Manifesto. Let me say that every Member on those benches opposite is there because of that document and the promises contained therein. They are now endeavouring to discard everything in it hoping that the electorate will have memories as short as theirs in relation to that document. For example, on prices, there was a full chapter devoted to how Fianna Fáil, in government, would ensure their control. They would restructure the National Prices Commission making it more effective. Government policy would be directed towards discouraging increased costs and prices in all areas where they had control or influence. Not only have the Fianna Fáil Government failed to exercise that control and influence where they have had it but have gone out of their way, through their policies, to add price increases, to increase inflation. The example is known to everybody in this House and outside it—a 4 per cent increase in inflation brought about by domestic policies adopted by Fianna Fáil in their last budget. Nothing in that 4 per cent can be put down to increases from outside, in the case of oil costs and so on but rather to purely internal domestic policies adopted and pursued by them.

Yesterday in this House my colleague, Deputy L'Estrange, elicited from the Taoiseach a reply in relation to price increases of the list of commodities included in the CPI, increases from mid-May 1977 to mid-August 1978. Looking down that long list one cannot but be struck by the vast increases which have taken place despite the assertions made in the Fianna Fáil Manifesto that measures would be taken to control prices and ensure that nothing slipped through that was not proved to be essential to the well-being of whatever industry sought the increase. In that period, for example, the price of bread rose by 71 per cent, flour by 46.1 per cent, butter by 24.1 per cent, fresh milk by 63.2 per cent, tea by 42 per cent, coal 65 per cent, bottled gas 80.7 per cent and mortgage interest rates by 66.5 per cent. Indeed there are higher ones than those but I do not want to go through the entire list. Those are but a few of what I regard as the basic necessities of life which our people are forced to purchase to survive. Yet the Fianna Fáil Government are prepared to allow massive increases take place.

Confronted with the same problem when the National Coalition were on that side of the House five years ago what did they do? They introduced subsidies. Indeed Fianna Fáil boasted that it was they who forced them into the introduction of such subsidies in 1975. I have heard them shout that from the roof tops, that only for Fianna Fáil the National Coalition would not have introduced those subsidies at that time.

Fianna Fáil gave, as the two basic reasons for the introduction of the subsidies, the falling standard of living and a large increase in inflation. When Deputy O'Donoghue was Minister for Economic Planning and Development on at least five or six occasions I have heard him give the reasons why in 1977 and 1978 the removal of subsidies was appropriate and the introduction of further subsidies was then wrong because there was at that time a falling inflation rate and a rise in the standard of living. Now we have the reverse. The very factors which Fianna Fáil at that time said were necessary for the introduction of food subsidies are present. We have had inflation of over 20 per cent this year, although now it is just under 19 per cent. We have falling real incomes and a reduction in the standard of living. Yet, what do Fianna Fáil do? They allow increases of 40, 50, 60 and 70 per cent on the price of basic commodities necessary for survival. No talk now about subsidies. If they were on this side of the House, they would be shouting from the roof tops. Have they any intention of reintroducing the subsidies, subsidies removed by them, to alleviate the hardship on our poor and less well off who are suffering severe hardship because of the enormity of the increases being allowed by a Government who said they would control prices.

On the question of financial management, Fine Gael, commenting on the budget in February last, stated that the Estimates for receipts and expenditure on which the Minister, Deputy O'Kennedy, based his calculations were suspect. Now, with threequarters of the year gone by, it is painfully and regrettably obvious that these suspicions were only too well grounded. We now find the economy in worse shape than ever before in the past 25 years. We have inflation running at 19 per cent, unemployment on the increase—something about which I shall talk later—and a severe loss of confidence in industry, agriculture, fisheries and any sector of the economy one cares to mention.

A national understanding has recently been negotiated by the social partners which seemingly will do nothing to improve either inflation or employment and, indeed, little to restore the confidence which is so badly needed for our economic recovery. On that issue of the understanding, on 25 June 1980 the Taoiseach, speaking in the adjournment debate in this House said:

The single most important economic decision facing the community today is the level of incomes we agree to accept over the next 12 months or so. This decision is central to our whole economic and financial future. We cannot carry income increases which are out of line with those which have been accepted in Europe generally.

Has the level which has been negotiated been the same as that obtaining in Europe generally? I suggest that it is much, much higher. Indeed, let me say that our workers are entitled to their pound of flesh, but we cannot have jam on both sides of our bread. If the Taoiseach says we cannot survive in the hothouse of European competition unless we bring down our demands to the levels obtaining elsewhere and then literally bulldozes his way through the social partners to get an agreement at any cost, then somebody must pay the price. This national understanding will, unfortunately, do little for either our inflation rate or employment.

A Taoiseach who can say that and three months later pat himself on the back in a PR exercise on television for having pushed this understanding through himself because he wanted it for his own glorification does not inspire confidence, since he says one thing and does something else. The effects of what we see happening now will, in the long run, cause severe hardship to many thousands of people. Our rising costs, as a small country, will—as is well known to industrialists, employers and employees —blunt our competitive edge. Economic growth, for example, this year will be around 1 per cent and the present prediction for 1980 hovers around the 1 to 1½ per cent level. What this means, in practical terms, is continued unemployment.

On the question of unemployment, we have had promises at regular intervals about what the Government are doing to generate employment. Yet unemployment continues to rise. The manifesto said that tens of thousands of jobs would be created from the exploitation of natural resources. One is at a loss to know where these jobs have gone to. Last Sunday I was at a church gate in the Donegal area listening to a senior Minister telling his audience that the Government were now creating more jobs and that more people than ever before were being employed. The Minister was telling this to people whose sons, daughters, wives or fathers were becoming unemployed or were going on a three-day week in a certain Donegal town. These are the kind of unconvincing arguments which are being made and this is treating the electorate with contempt.

When the new Taoiseach took office he raised expectations because his track record was such that it was felt he could do something. Since he has become Taoiseach there has been a downward trend of 27,000 jobs. There are over 107,000 people unemployed and yet the Ministers will go around Donegal in the next few weeks and tell us how rosy everything in the garden is.

The announcement of an increase in our exports has been turned around to show that the industrial sector is in a very healthy state. It has been correctly said that there is a 20 per cent increase over the past eight months in industrial exports. There has been a 20 per cent increase in value. What we have not been told is that translated into volume terms that becomes an 8 per cent increase and we were not told that 8 per cent is made up of two sectors in the economy, the export of meat and live animals which showed a 43 per cent increase, and the major increase in the export of electronies. If these two sectors are taken out of the whole spectrum of industrial exports there will be a decrease in the rest. In relation to the export of live animals and meat it is well known that we are exporting more than we are producing and the net result will be a drop in our national herd so that in 12 or 18 months' time we will reap the bitter harvest of that export. The Minister has the gall to tell us that the farmers are showing confidence in the Government. The farmers are selling their stock not at a reasonable price but at cut price just to survive and the Minister says that confidence is being restored.

On the question of imports, we were told with fanfares loudly screaming that our balance of payments has come into line. On scrutinising that figure one will find that the balance of payments is reducing and that the gap between exports and imports is closing only because the investment is not there, as has been said by at least two Members in this House today. Industries are not purchasing machinery, raw materials for further production or half-processed materials. At any given time those two sectors would account for something like 60 per cent of our total import bill. Our import bill is down because activity in these sectors is not what it might be. In industry we have what is called capacity utilisation. If industry is at full capacity it is using 100 per cent utilisation. For the past three months industry has been working to 60 per cent of capacity. Up to May of this year it hovered around 65 per cent to 70 per cent but now it has shown signs of dropping. That means that industry is working at less than two-thirds of its capacity. That explains the closing gap in our import-export bill. That is serious, yet the Taoiseach and the Ministers will appear on television and dish out figures to an unsuspecting public about how well we are doing without any clarification or explanation as to why the figures are as they are; but explained they will be. There is no growth in industry at the moment except in electronics, which is a new industry. That had to grow because the pace was so slow that anything would have been an improvement. However, that industry is in a healthy state.

The balance of payments is reducing for the reasons I have mentioned, and worse still, if we look further into the figures we will find that while the lack of machinery, raw materials and half-processed materials for further processing is there, it is absent in our import bill. What is increasing, albeit by a small margin, is finished products, consumer durables. They are going up and that means we are importing more of them. Because of our reduced disposable real incomes within the country we are buying less of them at home. That is another reason why our capacity utilisation in industry stands at 60 per cent and is dropping.

The Confederation of Irish Industries, the Federated Union of Employers and the Irish Congress of Trade Unions have been consistently warning us of the importance of competitiveness in foreign markets. The Taoiseach warned us of this and pointed out the lunacy of seeking pay increases which would help to blunt that competitive edge. There are firms who can afford to pay this and stay within the terms of the national understanding but we must remember that of the 4,600 firms operating here 4,100 of them employ fewer than 100 people. Those small firms who even in normal circumstances have cash flow problems will be the victims of this level of agreement that has been negotiated. That will lead to further unemployment.

The IDA, as they have always done, will do their utmost to ensure that at the end of the day there will be a net gain of jobs on the ground. Last year the IDA succeeded in putting something like 1,000 jobs on the ground, jobs created as against jobs lost. This year it is unlikely, unfortunately, that the IDA will succeed in showing a net gain because since Deputy Haughey, of whom so much was expected, took over job losses have been running at the rate of 3,000 per month. That level of job losses has persisted through the summer months at a time when seasonally adjusted figures should level off. However, this year they did not. For example, in August, there was a 3.8 per cent increase in employment and roughly 4,000 job losses for that month. We can expect that to accelerate, judging by past experiences over the winter months. I have no doubt that the IDA will reach their target in 1980, but even if that happens and the IDA succeed in creating 30,000 jobs the net result will be a minus at the end of the year because job losses will outrun job creations.

What is being done to curb this downward trend? I recall earlier this year, when interest rates were 20 per cent plus, appealing to the Minister for Industry, Commerce and Tourism, Deputy O'Malley, and the new Taoiseach to take immediate action to ensure the retention of jobs. The Taoiseach, in the course of his statement on the adjournment debate on 25 June last, mentioned that he and his Cabinet were considering the prospect of relieving the pressure on industry. At that time at least 20,000 jobs had gone down the drain. Many of those jobs could have been saved had the Taoiseach and his Cabinet introduced some form of relief scheme to reduce the burden of exorbitant interest rates. At the time of the budget we were told that this year regardless of any pressures that came to bear on the Government, borrowing would be brought into line. As far as I can recall, the budget figure was about £890 million which was needed to carry us through this year. However, we now find that the figure will be exceeded by about £200 million. In other words, we are talking about a miscalculation of about 22 per cent by the Minister for Finance.

I am not surprised at that miscalculation because there is no comprehensive economic plan. I listened to Deputy Haughey when he was Minister for Health and when he was in Opposition demand a comprehensive economic plan. He felt that such a plan was necessary if we were to keep our finances in order and push forward in the right direction. What did he do on assuming the position of Taoiseach? He sacked the man who was appointed to introduce an economic plan. Deputy O'Donoghue was fired by the new Taoiseach and, to add salt to the wound, the Department of Economic Planning and Development was abolished. If that is not a U turn I would like to know what is. It is because of the lack of such a comprehensive plan that the Taoiseach and the Government are stumbling from crisis to crisis week in and week out. One week they have to meet representatives of the farming community because the pressure is getting too hot and the next week they must meet some other group. They stumble from one crisis to the next, but to pay for their incompetence and bungling we must borrow.

It is time that the Government realised how serious things are. They should draw up a plan that will alleviate the pressure on certain sections of the community. The pressure which now exists extends across the whole spectrum of Irish society. For example, I have yet this year to meet any sector or any individual in it to tell me that he is happy with the performance of the Government. Yes, the diehard Fianna Fáil supporter will tell you that they have problems but of course Fianna Fáil have no control over the cost of oil or the cost of imports. He will try to make excuses but he cannot deny that there are terrible problems that are causing him hardship. We have gimmicks. For example, the Minister for Agriculture spoke about the confidence now to be seen in the farming community. We have restructuring of loans for farmers. He said:

Arising out of the Government discussions with the four associated banks about the present position of farmers' indebtedness, the banks indicated that they will take a constructive and positive approach to the restructuring of existing loans on a case-by-case basis where farmers are faced with serious repayment problems.

That does not mean anything and the Minister knows that. The Minister for the Environment six weeks ago announced that he was asking county managers to take the same reasonable and constructive view of farmers who could not pay their rates. That message was never brought down to county managers' level. That was six or seven weeks ago and there is no county manager today who is carefully and reasonably examining the problems of ratepayers in his county because his job is to collect rates. I wonder what the message to bank managers means on this case-by-case basis. At the end of the day they have discretionary power to say: "In your case we cannot restructure your loan because of A or B or C". That means nothing, as the Minister knows. We have the Minister praising himself about the zeal with which grants are being paid despite the increase in applications. Every member of the House is aware of the kind of letter emanating from the Minister's Department saying that because of pressure of work there will be some delay in the payment of grants. Yet we are told today by the Minister that everything in the garden is rosy and that confidence is being restored. What does he think we are? We had the Minister of State who is now in the House announcing an airport per week in principle but of course he made no commitment in money terms.

Mr. Flynn

: Is the Deputy saying he does not want these airports to materialise?

Mr. O'Toole

: I want money to show your commitment to what you are saying. Let us forget about "in principle". I want commitment in money terms, not in terms of principle. I am not surprised at the current economic and social mess that we have. The Taoiseach was looked upon by many thousands of people as the saviour of the country but he is finding it very hard now to save his own skin because in his management team, the Cabinet of which at least two-thirds did not vote for him to become Taoiseach, he cannot open his mouth without looking over his shoulder to see the reaction. There is disunity, disharmony and dissension in that Cabinet. He cannot grasp the nettle because it takes too much time to save his own skin. That is the problem that is at the base of our current crisis.

It is very strange that last Sunday one of his Ministers spent at least two minutes of his five-minute speech trying to convince the public in Donegal as to how unified the Fianna Fáil Cabinet was. Unless there was some disunity in the Cabinet why should he spend 40 per cent of his time in this way?

Mr. Flynn

: At least we were there. Fine Gael were not there at all last Sunday.

An Leas-Cheann Comhairle

: The Deputy's time is now up.

Mr. O'Toole

: I shall finish by telling the Minister that I can give him the names of ten churches where there was no Fianna Fáil presence in Donegal last Sunday—at least ten.

Mr. Flynn

: I know that where I was speaking they were absent.

An Leas-Cheann Comhairle

: I think it would be wise to get back to the debate and leave that discussion until next Sunday in Donegal.

(Interruptions.)

An Leas-Cheann Comhairle

: Deputy Briscoe is in possession.

Mr. Briscoe

: There are seven million people unemployed in the European Community as against five million in 1975. Our unemployment figure has not reached anything like the figure reached during the last period of Coalition Government. Whatever Opposition Speakers may argue, since we came back to office certain categories were put on the register that were not there before and they have helped to inflate the unemployment figure. We are not comparing like with like.

Mr. O'Toole

: How many extra? Six thousand single women.

Mr. Briscoe

: We are talking about the figure of 105,000.

Mr. O'Toole

: Of which six thousand are extra.

Mr. Briscoe

: It is interesting to note that inflation here has not risen to anything like the level it reached in 1975 when it was around 26 per cent. When a recession hits the rest of the EEC and when we have seven million unemployed against five million in 1975 we see that we have weathered the storm better under a Fianna Fáil Government.

The Government have always been very proud of being the best defenders of the less well off sections of the community. They always fared better under Fianna Fáil than under any Coalition Government. In three years of Fianna Fáil Government the real value of social welfare benefits has increased by about 25 per cent. People who depend on social welfare have also benefited from many improvements along with this. We can certainly hold our heads high when we say that we are protecting the weaker sections. In contrast to our 25 per cent real increase in the standard of living, there was no improvement whatsoever during the 4½ years of Coalition Government because their increases were swallowed up by inflation. During their 4½ years, inflation was 100 per cent whereas inflation has been only a little more than half during our 3½ years. Therefore, the standard of those depending on social welfare has continued to rise.

As far as the workers are concerned, under Fianna Fáil their living standards have been protected by pay rises, tax cuts and increased social welfare benefits under the national understanding, in contrast to the period of the Coalition when living standards fell, in some cases drastically, particularly in the case of skilled and middle income groups. The wage agreements in 1976 and 1977 provided for pay rises which the cost of living increases rendered worthless.

Mr. O'Toole

: How can the Deputy explain the fall in domestic expenditure at the moment?

An Leas-Cheann Comhairle

: Deputy Briscoe should be allowed to make a speech in his own way.

Mr. O'Toole

: He is making it in his own way and he is not very convincing.

Mr. Briscoe

: Deputy O'Toole quoted figures out of the air about 3,000 jobs lost every month in the last year.

Mr. O'Toole

: I quoted a statement made by the CSO.

An Leas-Cheann Comhairle

: At this hour of the evening Deputy O'Toole should allow the speaker in possession to proceed.

Mr. Flynn

: It is not typical of the man. Something is upsetting him.

Mr. Briscoe

: In his own peculiar way Deputy O'Toole tried to point a finger at the Leader of our party. He has been suggesting that Deputy Haughey has not the support of the party, that he was only elected by such and such a percentage. The Leader of his own party spoke here yesterday and there were not more than six Fine Gael Deputies to hear him. If he had heard Deputy Ryan here this evening he would have thought that Fine Gael had two leaders. We on this side have been playing down many of these things. We know they exist and so does Deputy O'Toole. The Labour Party also have their problems. I have always said that we need an Opposition that could provide a good alternative government if called on by the people. Unfortunately, the people do not have such an alternative, fortunately maybe for Fianna Fáil.

Mr. O'Toole

: Which Fianna Fáil party is the Deputy talking about?

Mr. Briscoe

: The Deputy will know at the next general election.

Mr. O'Toole

: How about the by-election? That is the first thing.

Mr. Flynn

: The Deputy is very vociferous, not at all like him.

An Leas-Cheann Comhairle

: Perhaps Deputy O'Toole would head off for Donegal.

Mr. O'Toole

: Is that an order or a request?

Mr. Briscoe

: In all his condemnation of the Government's economic policies, Deputy O'Toole did not have one constructive policy to put forward. Fine Gael have been talking about the great plan which they will put forward at the next general election, but they will not unveil it before then. It will have a lot of cobwebs on it by then. How any party who purport to have an economist as their leader, I suppose a self-professed economist, without knowing what the state of the country will be at the time of the next election——

Mr. O'Toole

: Would the Deputy like if Deputy FitzGerald put in writing for him his credentials? He is far from a self-professed economist.

An Leas-Cheann Comhairle

: Deputy O'Toole has finished his speech.

Mr. Briscoe

: Deputy O'Keeffe, the king of the interrupters, has arrived. The main theme of the speeches from this side of the House has been the need for stable industrial relations, something which everybody should be encouraging. Unfortunately we get comments outside from Fine Gael and Labour members trying to harm the work we are doing. They are mocking the national understanding yet they will say when the agreement has been signed that they are very glad, that it is for the good of the country. They should be encouraging the Government in their work and wishing them well. When we were in opposition we put up alternative policies to the then Government which very often they acted on, but six months after they should have acted, as in the case of the devaluation of the Green £. Every day I meet people—I have always prided myself as being very close to my constituents—but I have not found anywhere anything like the anger that was expressed during the reign of the Coalition Government because of the way they mishandled the economy. I am not being unfair when I say that individuals of the Coalition Government were hated by some people. They could not go anywhere without being boohed or heckled. There are no hated figures in Fianna Fáil. Unfortunately that cannot be said in this House because we all know that Deputy Cluskey seems to have a fixation on the Taoiseach.

Mr. O'Keeffe

: Is this a debate on the economy?

Mr. Briscoe

: I am talking about the economy and the Opposition's attitude to it.

An Leas-Cheann Comhairle

: The Chair will do its best to control the debate.

Mr. O'Keeffe

: Would you ask Deputy Briscoe to control himself?

An Leas-Cheann Comhairle

: Speakers from Deputy O'Keeffe's side have introduced a number of personal matters. It would be much better without it.

Mr. O'Keeffe

: Deputy Briscoe is trying to provoke me. He does not seem to be in possession of the facts. The only party with the policy of industrial relations is Fine Gael.

An Leas-Cheann Comhairle

: When Deputy O'Keeffe has been called on to speak he can give the facts as he sees them. Deputy Briscoe at the moment is entitled to be allowed to give the facts as he sees them.

Mr. Briscoe

: I spoke to a prominent trade union leader recently. We have heard of Fine Gael's industrial relations policy, but that man said that that is not a policy. Fine Gael have not even consulted the trade union movement. I can tell the Deputy that trade unionists do not regard Fine Gael as having a policy on labour relations. Such a policy can only work with the co-operation of the trade unions. We have made tremendous progress with the unions. We understand them and are co-operating with them——

Mr. O'Keeffe

: Where is that policy?

Mr. Briscoe

: It is in practice every day.

Mr. O'Keeffe

: A fire brigade action.

Mr. Briscoe

: In the recent oil tanker dispute—Deputy O'Keeffe is again trying to interrupt me.

An Leas-Cheann Comhairle

: This cannot be allowed to continue. Deputy Briscoe must be allowed to speak.

Mr. Briscoe

: I always like to bring a little sparkle into the debate. In the recent oil drivers' dispute everyone was champing at the bit for the Government to do something, but the Government went through all the procedures a Government should. All the industial relations machinery that could be gone through was gone through. It was seen by the public and the trade union movement that when the Army were finally brought in the Government had no alternative. Congress was satisfied that the Government were justified in the circumstances in bringing in the Army. There was extremely close co-operation. I am very proud of the industrial relations this Government have with the trade union movement and workers generally. This has always been so, but we have seen it more in action this year than any other.

One of the exhortations which has come from this debate to the people is that in the new national understanding they must abide by the agreement that has been reached. There must be full use of all the industrial labour machinery. There must be full co-operation with the unions. Last year unofficial strikes cost us £100 million.

Mr. O'Keeffe

: A great record, God help you.

Mr. Briscoe

: A lot of people lost jobs and that money could have been spent providing employment. Irrespective of what side of the House we are on we should all vociferously condemn unofficial disputes where the trade unions are ignored.

Mr. O'Keeffe

: And have a policy to prevent them, which the Government do not.

An Leas-Cheann Comhairle

: Deputy O'Keeffe will have his opportunity to speak later.

Mr. Briscoe

: The days of locking people up in jail are gone. We do not do that any more.

Mr. O'Keeffe

: The Government tried it in 1966. That was their last policy.

Mr. Briscoe

: The trade union movement know full well that whatever co-operation they want by way of legislation from this Government will be theirs for the asking. They do not consider that Fine Gael have a labour policy.

Mr. O'Keeffe

: Rubbish.

Mr. Briscoe

: It is rubbish and they will be the first to tell you in due course. The prophets of gloom are all very busy. As stated yesterday by the Taoiseach, we have a population that is growing seven times faster than the average for the European Community. While most of those populations are static, and in some cases dwindling, ours is increasing. About 50 per cent of our young people are under 25 years of age and that presents a formidable task for whoever is in Government. We are conscious of our responsibility to these young people. There are many work programmes to help them which were not available during the period of the last Government.

In relation to the cost of fuel, this year we spent between £250 million and £270 million more on importing oil. Such a figure would have bought all the oil the country required in 1973. That is a very sobering thought. The ESRI recently brought out another of their gloomy forecasts.

This is a body which over the years has been extremely inaccurate. For example, in regard to growth in GNP for 1975, in October 1974 they predicted a nil growth. By March 1975 they had changed that to ¾ per cent growth. By June 1975 they had changed to minus 1½ per cent growth and by October 1975 they had predicted a drop in GNP of 3½ per cent. In January 1976, looking back on the last year, they predicted that when the figures were published it would be about minus 2¾ per cent. The actual figures were an increase of 0.3 per cent. The significance is that they were over 1,000 per cent wrong in their predictions. These forecasts made every few months are notoriously inaccurate and have a way of being either up or down.

This is one of the problems we have with economists. They are always saying if this or that happens. They never deal with realities but reckon on perfect conditions. My late father used to say that figures cannot lie but liars can figure. Anybody can do anything they like with figures, but what counts is when the figures are published. When the latest ESRI report came out it made the headlines. This was the big story. I have no faith in their predictions at all. I am basing that lack of faith on their previous history.

Mr. O'Keeffe

: They underestimated the talents of the Government of the day in 1975.

Mr. Briscoe

: Our exports have increased by 20 per cent, although Deputy O'Toole tried to belittle them and spoke about 8 per cent in volume. In a market which is going through a slump in OECD and EEC countries our phenomenal growth rate is something of which we should be proud. Deputy O'Toole tried to belittle the fact that we had electronic industries. We are glad to have them and to have young people with the education and talent to go into these industries. We are proud that foreign industrialists can come in, build factories and invest money here. Compare that to the time of the Coalition when investment was at a standstill.

The creation of new jobs in the present climate is nothing short of a miracle and great credit is due not only to the Government who set the guidelines but also to the IDA who have done a wonderful job selling the country and letting people know what is available. What we want badly is for the word to go out that Ireland is a good country to come to because we have stable labour relations.

Mr. O'Keeffe

: And plenty of people on the dole.

Mr. Briscoe

: In Fianna Fáil we have always been great optimists and provided people with opportunity.

Mr. O'Keeffe

: The twin national aims. They won five elections on that.

Mr. Briscoe

: There was a former member of Deputy O'Keeffe's party who once described the Industrial Development Authority as bringing in tin shacks.

Mr. O'Keeffe

: Who set up the IDA?

An Leas-Cheann Comhairle

: Deputy O'Keeffe is old enough to conduct himself properly. He should stop interrupting.

Mr. Briscoe

: It is on the record of the House who said that. Nothing like what Fianna Fáil achieved under it and Seán Lemass-

Mr. O'Keeffe

: Do not go back in history. The Deputy knows the policy from 1942 to 1948.

Mr. Briscoe

: A former Member. Deputy James Dillon, referred to tin shack industries and said they did not want them.

Mr. O'Keeffe

: Who referred to the sugar company as a white elephant?

An Leas-Cheann Comhairle

: Deputy O'Keeffe is not in possession. Nobody knows better than he that he is being completely disorderly.

Mr. Flynn

: It is not typical of the Deputy. They are all very agitated this evening.

Mr. O'Keeffe

: I am being exceptionally aggravated.

An Leas-Cheann Comhairle

: If the Deputy is, he knows what to do.

Mr. Flynn

: They have shifty feet about Donegal, that is what is wrong with them all.

An Leas-Cheann Comhairle

: They will have to shift their feet out of here if they keep interrupting.

Mr. O'Keeffe

: If they will, I will be very happy.

Mr. Briscoe

: The Minister for Energy here today referred to the development of alternative fuels as sources of supply for this country. The people must be absolutely clear in their minds, and I am quite sure that they are, that this Government have embarked on a policy of trying to reduce their dependency on oil. They have embarked in a very vigorous manner on energy saving. I have some suggestions which I hope the Minister might incorporate as part of his policy. First of all it is very important that a register of heating contractors, central heating firms, firms who instal solid fuel boilers and so on should be set up. I am aware that there are a number of charlatans going around taking money from people who can ill afford it to convert their heating systems, and their work is not very good. This is one of the first things that the Minister should consider and I hope that very soon he will have a register of these heating engineers and that any persons or firms will have to be authorised before they can offer their services in this regard. The heating engineer who installed my heating system told me that some of the cases he has come across are pityful.

We need also a fuel advisory service in Dublin and in most of the other major centres where people can seek advice regarding the burning of fuel. This practice exists in the UK where it is very successful and where advertisements advise people to go to their local fuel advisory centre. This is very important and a lot of money can be saved by people who are burning the right fuel and learning how to conserve their heat. At the moment the only advertising that I see on television here in this regard is by the ESB advising people to lag their pipes and so on. But the ESB are saying, "Buy from us" and I consider that in many instance the ESB provide very unecomomical form of heating because they are the biggest users of oil in this country. We must try to reduce that dependency on oil by using as little of it as possible. It is difficult for a company like the ESB to sell their products while at the same time trying to conserve oil. The Minister for Energy has referred to the converting of some of the existing stations and building of new power stations to use heat.

The Minister has stated his interest in fuel efficiency and he has set up at the Department of Energy a section which will be dealing with sectional utilisation of fuel, such as use of energy in industry, agriculture, services, public buildings and particulary in the home. That "particularly in the home" is important and I ask that the Minister will translate that into a fuel advisory office. There should not be any great difficulty in getting a place in Dublin for this purpose. One section of the IIRS which is not really developed is the home heating section. They have been giving good advice and when I was converting from oil central heating to solid fuel I got very helpful advice from them, but they are not really geared to that.

The figure is up this year over last year and we have no guarantee that the price of oil is not going to go up next year, and there is not a thing that we can do about it. We have no influence with OPEC or any of the big countries and we all know that each will be fighting for his own corner. It is extremely important that we are at all times preparing for the worst to happen.

Another policy of this Government which has had an effect much greater than people expected was the setting up of the Irish National Petroleum Corporation. It was very opportune that they were there in the recent crisis in which they played a very important part. It is fair to say that the Opposition did support the Government when they announced the setting up of this and I am willing to give them credit that they did not oppose it.

Mr. O'Keeffe

: That is a change.

Mr. Briscoe

: The inflation rate is moving downwards and it has come down very rapidly. The increase last quarter of 3 per cent was the lowest such increase since the November quarter of 1978. Inflation will be going down to around 18 per cent for this year, and this is very desirable. If we are not subjected to further increases in the price of oil and, following on that, pay increases to try to make up the difference—Deputy O'Keeffe was smiling at my slip of the tongue. He will recognise that it was a slip of the tongue in the right direction.

Mr. O'Keeffe

: I was smiling at the boast of 18 per cent.

An Leas-Cheann Comhairle

: The Deputy is entitled to smile but not to put it into language.

Mr. Briscoe

: I was not smiling at the high figure of 18 per cent. I am talking about being in the right direction. Deputy O'Keeffe has reminded me that inflation here is still lower than that of our neighbours across the water in spite of their North Sea oil and, goodness knows, they have not felt any pinch from the increases in the price of oil from OPEC countries. Their pound is very high and this helps us considerably. There have been critics who have said that if only we had stayed out of the EMS and remained tied to sterling we would see how much the IR£ would be worth. The IR£ has more than held its own against the other European currencies.

Mr. O'Keeffe

: Not lately.

Mr. Briscoe

: It has held its own against most of them and occasionally does better than some of them.

Mr. O'Keeffe

: It is falling.

Mr. Briscoe

: In spite of all our troubles we are still having less trouble than many of our partners in the EEC. It is important to realise that while our neighbours are having this kind of problem we are not panicky. We are giving this country a calm leadership.

Mr. O'Keeffe

: Doing nothing.

Mr. Briscoe

: People need calm, optimistic leadership. If confidence is to be developed in the people then the people have to believe in themselves. Those governing them have to be seen to be confident that they can do and are doing their job. We have that confidence and underlying all the difficulties of the present—and we do not deny that we are having difficulties—the people at least are quietly confident that they have the best possible Government they could have at this time. Let me go back to 1975, the worst year of the Coalition Government—

Mr. O'Keeffe

: Go back to the by-election in Cork. You got your answer there.

Mr. Briscoe

:—when Deputy R.Ryan was Minister for Finance and the cost of a gallon of petrol was increased by 12p. Without allowing for inflation since that time, he increased it by 35p per gallon. In 1973 or 1974 that was a lot of money. Before Christmas he increased the television licence from £18 to £32. These were savage increases.

Mr. O'Keeffe

: What have Fianna Fáil done? Have they lowered the cost of a licence?

Mr. Briscoe

: Relatively speaking and allowing for inflation, the cost of the licence is lower now. If the Deputy examines these figures he will find I am correct.

Mr. O'Keeffe

: I have grave doubts.

Mr. Briscoe

: I have not. I am satisfied that we have a Government who are experienced and capable of handling the present situation. I am satisfied we have a leader who will not panic. This is important. This Government are aware of the economic climate. They know where difficulties are being experienced and they are assisting in those areas.

At the beginning of 1980 we said this would be the toughest year from a recession point of view. Sometimes economists talk in such high-flown language that it is very difficult for ordinary people to understand them. Perhaps I could explain what happens in a recession. Every time there is a recession I dig out this story. In 1966 when I was going on my first trip to America my late father gave me some tips as to what I should say. He said if I was asked if Ireland was going through a recession I should tell them that when he was visiting the United States in 1956 he too was asked that question. His reply was that only rich countries had recessions; Ireland was too poor. He said that I could tell them that Ireland had prospered so much in the last ten years that we were experiencing our first recession.

As everyone knows, as prosperity grows the greater the recession. One does not have to be a trained economist to know that that is a fact of life. During the next six to 12 months while we are going through the worst of the recession, the people should exercise more self-discipline; wage demands must be kept within certain levels; deals made in the national understanding must be kept by all; and the trade union movement must ensure that unofficial disputes are quickly sorted out. They should impose the authority which the people except. The Government too recognise they have a vital role to play in this area.

Many people feel unofficial disputes should be outlawed. I share that feeling but it must be done in a certain way. The penalties imposed on the unofficial striker must ensure that there is no profit for him. For example, his union card could be torn up, under law he should not be able to get another union card and no union should accept him. That could be one possible solution. We are not putting the man in gaol, merely warning him in advance that no union will allow him to become a member if he has been expelled from another union. I am not sure when we will have calmer times to introduce legislation in this area. I have always been told that times of difficulty are not always the best times to impose new laws because people tend to be much more emotional.

I hope this time next year we will have come out of the recession. The Government said they are in a position to take full advantage when the recession is over. Foreign industries are still being set up here.

Mr. O'Keeffe

: But a great number are not.

Mr. Briscoe

: Please God 1981 will be a year we can look back on and say we survived pretty well, and it will be a long time before we have another recession as bad as the present one.

Mr. O'Keeffe

: Please God we will have a new Government.

An Leas-Cheann Comhairle

: Please God Deputies will stop interrupting and listen to the speaker.

Mr. Blaney

: I heard a Labour Deputy tonight call for a November general election instead of a by-election. He made a good case as to why there should be a change of Government, but what frightened me was when I looked at the alternative. When thinking about the last three years in office of this Government, one cannot forget that the rot that is now so evident had started a few years earlier.

This Government must take the rap for the present situation. The new Fine Gael leader, despite all his publicity and travelling all over the country, has made only destructive criticism. While that might be all right for a backbencher like myself, it is not good enough from the leader of the main opposition party who, if the present Government were displaced, would be the alternative leader of the new Government.

Before we have a general election I would like to see a very much improved operation by the present Government. Whether they admit it publicly or not, I am sure they know they can and should be able to perform better than they are at the moment. Not only would I like to see that happen in the next 12 or 15 months, but I would like to see the leadership offering the alternative Government presenting some concrete, positive proposals that could be demonstrated to be capable of curing the ills of which he is so rightly condemnatory. I might not have made these comments were it not for the fact that I find myself in the rather awkward position of having ten minutes here this evening and of having to continue tomorrow for thirty-five minutes, a fragmented situation which leads one to speak, perhaps, too quickly and not in enough depth. While it would appear that there is a legitimate reason for a Labour Member to suggest that there be a general election instead of a by-election the leadership that would be the alternative offering is not putting forward proposals that would cure the ills for which the Member concerned has condemned the Government. For the benefit of the country as a whole I should like to see, within the next 12 to 15 months, an improvement and a greater effort on the part of the Government to show better form than they have been showing in recent times and also more positive proposals and less destructive criticism from those who would put themselves forward as an alternative Government. In particular there might be less personal abuse of the leader of the Government at a time when there is so much more work to be done.

Mr. Flynn

: Hear, hear.

Mr. Blaney

: The task facing us requires the best efforts of the people on the front benches of all parties. That is the sort of effort that is required even if, from a party political point of view, it might not be in the interest of some of the parties. I say that such an effort is required in the light of the unemployment situation and of the signs once again of emigration, emigration that the Minister of State opposite and myself know all about. I remember emigration in its worst possible form and I remember also the unemployment of those times. The situation was so bad then that the unemployed person who could raise enough for his fare out of the country was considered to be the lucky one. However, that is a situation that has not been evident for some time, particularly during the past 15 to 20 years. We had reached a stage where the lack of confidence which was evident in our people and which was due, perhaps, to our history and to the almost dire poverty not only of decades but of centuries, had disappeared. That inferiority complex began to disappear only in the mid-fifties and from then on there was gradual progress with, of course, the ups and downs that are experienced at such a time. But I fear that if we continue to operate as we are operating now, we will slide gradually downwards. Indeed all the indications are that that downward trend has begun. If this trend is not reversed the bad days of which I have been speaking may be experienced again.

People on the Government benches have used the argument that there are seven million unemployed in the EEC. Perhaps if I were on those benches I would make better use of that argument but when one has regard to the situation in these countries—I am referring to the mainland of Europe rather than to the UK and ourselves—one finds a much higher level of wage structure and as a result a much higher level of social welfare structure and, consequently, a capacity for those peoples even when unemployed, to weather the storm for longer periods than is the case in our country. All of these other countries are better off than we are and they have been in that position for a long time. That is why they are better able to cope with an unemployment situation. We do not have the fat on our backs from which to draw when times are bad. Any fat we had has been used up with the result that we are now in the position of having to borrow to meet the repayments on previous borrowings. I am not against borrowing as such but I am totally against it for the purpose of paying the housekeeping costs.

Mr. L'Estrange

: Hear, hear.

Mr. Blaney

: Luckily we are not living in the situation of 50 or 60 years ago when the attitude during a depression was that the workers could starve but for how long will the contributions of those who are fortunate enough to be at work continue to be adequate to provide for those who are out of work? For how long will the employed be able to bear the tax burden that must be imposed on them because of the unemployment situation? I think we have reached the crossroads in that regard. We are borrowing for current expenditure purposes. In substitution for this borrowing I would suggest that we borrow for capital development. This is being done already but too much of the money is being used to cover the cost of the housekeeping with too little being devoted to capital expenditure. I appreciate that valiant efforts are being made to build up various industries despite the problems that beset our economy, but the inflow into the bucket is leaking out because of there being a hole in that bucket. Therefore, we must not only increase the inflow but endeavour to stop the leak or, at least, to reduce it substantially so that the net change is upwards and the balance is in our favour.

I should like to have seen the overtarget figure of £279 million being borrowed for the construction industry, a course that I advocated during the election campaign of 1977 and which I have advocated in various places since. I am advocating it even more strongly now though it may be too late. When one considers the numbers who are unemployed and when one considers also the skills and the expertise at our disposal, one realises the scope we have for such projects as public buildings, school extensions, road construction, water and sewerage schemes and so on, all of which, while they would entail some additional imports, would cost less than most of the other ventures that we could embark on and could not only put a great number of our unemployed to work but would provide the infrastructure that will have to be provided anyway in the years ahead when the cost will be much greater.

Debate adjourned.