: Deputy Blaney is in possession and has 33 minutes left.
Government's Economic Policies: Motion (Resumed) .
The following motion was moved by the Taoiseach on Tuesday, 21 October 1980:
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.
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."(resumed)—(Deputy FitzGerald.
and on 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%;
—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 mismanagement 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).
: I suggested last night the possibility of reducing unemployment while at the same time carrying out work that is required to be done on housing, roads, sewerage and water schemes. I mentioned in particular the necessity to improve bog roads and the return which could be achieved in energy conservation. I also mentioned the need for improvement works on smaller harbours around the country.
An area which has been much neglected is that relating to fish processing and we should insist that catches made within our national waters, that is, up to the 200-mile limit, should be landed here and processed. At present fish which is exported from this country is practically untouched, apart from being frozen or, in some cases, salted. In the EEC as a whole an average of seven people are employed onshore for every person at sea, while here the figure is 0.7 persons employed onshore for every person employed full-time at sea. I would be the first to admit that comparisons may be rather misleading but it is obvious that the greater part of our catch is used in fresh form and very little is added by way of onshore processing. This is an area in which the Government and their various Departments should be making most strenuous efforts to raise employment levels to those obtaining within the rest of the Community. There is obviously great scope for improvement.
There is also the matter of our communications system and, even though it is 25 years too late, it is good to see that the Government have embarked on an expansion programme for the telephone system. Perhaps this should be called a replacement programme because it is understood that with the equipment we have anything short of replacement is well nigh impossible. It has now been thought fit to provide a sum in the region of £650 million for telecommunications. In view of this, surely it is not too much to ask for an improvement in our road system which is continuing to deteriorate and which will shortly reach the stage when many roads will have broken down completely. This deterioration has been going on for some time and warnings have been given, but nothing of a substantial nature has been done. In areas where there is no other means of land transportation, this has become a very serious and urgent matter and I appeal to the Government to consider it in conjunction with the suggestion I made earlier that the construction industry, within which the construction of our road system would fall, is the very outlet through which many of our unemployed could usefully be occupied on necessary works. This industry uses mainly Irish materials, necessitating the least possible amount of imports, and gives employment to those who are now on social welfare and whom we are ill able to afford to pay. If we continue as we are at the moment then, with our rising unemployment and the inability of those who remain at work to pay further by way of taxation, we must surely come to the crunch point where we cannot take any more. I cannot see and I never have been able to see and nobody has been able to convince me of any good reason why during a depression in a country such as ours where the basic developments that I have mentioned, housing, roads, harbours and so on are needed so badly, we should provide money for people who are unemployed rather than providing the money so that they can do this useful, vital and necessary work of producing all these things.
We have the men and the materials here. Why do we not provide money now and progressively increase that money as the need arises? We should provide the money to do the work that is so necessary rather than provide it to idle our time away and further deepen the depression into which we have gone for some years now. It is said that it would cost too much, that we would have to borrow. But we are borrowing now for non-capi tal purposes; we are borrowing now to help to repay the charges on the borrowings already made. We will find that we have a need to borrow more to the point where we may not be able to borrow any more, and all this just to pay our ongoing running costs of the country day-by-day in the future. It is utter nonsense that this should be our attitude.
It is folly to think in terms of the depression being worldwide and that because other countries with unemployed people are not doing these things it is bad business for us to do them. But there is no comparison. We need housing; we need roads; we need the services of water and sewerage very badly in many parts of the country and we are going to provide them in the future. That is the intention. Nobody would deny that that is the intention and the desire of every party in this House. Any party with the reins of Government in their hands want to provide these things and it is only right that they should. Why should we pass up the opportunity when in these depressed times we have this escalated unemployment? Yet we do not seek to borrow to pay our unemployed to carry out these very vital and much needed operations but we borrow money to pay the housekeeping costs and so we are going from bad to worse.
Another thing that struck me was the massive cuts in RTE mentioned in last night's papers. I do not pick them out. I am merely reminded of the way in which the Government are approaching the depression at the moment. We are to have massive cuts in programmes, cuts in the broadcasting hours of television and radio. The queer twist about all this is that these cuts are being made so that their will be no redundancies in employment in RTE. I am all for no redundancies. But surely we are going about this in a strange way. This is a service being provided by the taxpayer, by a Government agency, for the public and yet we would cut the very service itself while at the same time having no redundancies.
We seem to have forgotten, not just in relation to RTE which is only a case that came up because of the headlines in the newspapers last night but in relation to all areas, that the public are paying for these services. The public, for whom the services are being provided, come second. It seems to be a part and parcel of the madness that is rampant in our approach to employment, unemployment and our whole financial policy. It seems that we will cut the very basis of the service that is being provided and at the same time the overall administrative costs do not go down. If we are being serious about this, if we want to cut the service then why should the overall administration still cost as much as it did when it was giving more of the service that it is there to do?
This sort of thing is not good enough. I am not advocating that because we cut the service we should cut the staff. But this indicates—and it is highlighted right through the entire structure of Government and administration today—that our overall administrative machine is far too big and too costly for the job that it has to do. We seem to be able to stretch our imagination to great lengths when it comes to setting up the structures without much regard to the cost of the structure or the service that the structure is giving and, at the end of the day, it seems that in all services of a public nature the public, for whom the service is created, is taking second place to all other considerations.
On this matter of overall administrative structure it is paralleled by the fact that we have too few wage-earners relative to the number of unemployed that they have to support. We have too low a turnover, too low a national activity to justify the administrative and bureaucratic sectors we have established to oversee and administer it. It is too low to sustain the burden of borrowing. We have too big a State and public machine for the job we have on hand which tends to be contracted in regard to services but costs no less to administer.
That brings me back to what I have been saying right through last night and this morning. We need to create more activity. We need to create more work. Some will ask where do we find that work. I say that we have oodles of it. We have a mounting demand because of our past shortcomings. There has been a build-up of demand that has not been overtaken except for a very short time if at all. We have these demands and we have a new, young, growing population that we have never had before resulting in increasing demands for services from housing to telecommunication and so on. We are not facing this fact. Our tempo of operations, our tempo of effort in regard to the provision of all the additional requirements of this increasing population does not take this into account.
Even if we must borrow, again why can we not borrow to build the houses, the roads, the sewers, the water mains, the additions to schools, new schools, hospital buildings, harbours, big or small, and provide on-shore processing for the fish now merely passing through the hands of various agents who naturally extract some profit for their trouble and to which we add practically nothing? Overall we add so little that it is not worth talking about. Such things could be done. If they necessitate borrowing at least we would be creating something of increasing value to us in the future rather than being a burden as it is now in that our borrowing is devoted mainly to cut current expenditure which should be created for in the normal budgetary provisions each year rather than having deficit budgeting as has become the fashion and practice in recent years. Because of the lack of creation of any wealth occasioned by the method of spending of this borrowing the burden is made all the heavier year by year, rendering it more and more impossible to turn to the positive capital development about which I am speaking. It could have been done three years ago. It should have been done three years ago, two years ago, a year ago. It can be done even today. Better that we do that today than continue the mad folly that we will come out of this depression.
The question is when and how will we come out of this depression. Idling our way through is not the answer. The sooner the Government take their courage in their hands and decide that they will not idle their way any further, that they cannot afford to do so any longer, realising that we are not living back in the early 1900s, that unemployment does not cure a depression, the better. We have progressed and live now in a society in which we do the best we can to help those who are unemployed, as distinct from the days 50, 60 or 70 years ago when the immediate cure for a depression was to put workers out of employment, letting them starve. That was the orthodox approach in those days. The approach today is not much different except that it does not cure the problem even in the drastic way it was cured in the past. Nobody in their sane senses would suggest that, even if we could, we should get ourselves out of a depression merely by allowing workers to starve. That is not the point.
But though the times have changed we have not altered our outlook. We have not got away from the idea that allowing unemployment to rise will cure our problems. It might have done in a dire manner 50 or so years ago, when there was no social welfare, no support, no benefit for anybody and people literally starved. We have not taken into account that having people unemployed, allowing things to run down, having more people going on the unemployment list not only does not cure problems in the dire way of the past but in fact creates more of a burden which progressively adds to our difficulties, prolonging the depression, making it ultimately more difficult to pull out of it. Yet we go along as if nothing had changed in this regard. We have taken no new initiatives in that respect.
Again I say to the Government: what is wrong with borrowing, if necessary, to put people to work, to undertake essential projects that would be of benefit not alone to present but future generations? What is wrong with doing that at a time when we have the people, the need and most of the materials, at a time when we are borrowing as much money to keep people in idleness and pay our overloaded administration, than would be needed were it to be borrowed for those capital purposes? If there were large inroads made on the 100,000 odd unemployed, which could undoubtedly be done in the construction industry, a massive saving would be affected. As a result of wages generated, paid directly and indirectly within the industry, there would also be the normal feedback in taxation. There would be indirect taxation, direct taxation and, at the end of the day, the difference between what we are paying for idling our way at present and doing the positive good work of employing our people and revitalising our economy would not be as great. I challenge the Government on that. It would not be as great as the deficit borrowing at present taking place in order to meet the ordinary, everyday running costs of the country. I am mystified. I cannot understand why we should continue as we are doing in this crazy fashion, because it is crazy.
There is, then, the opportunity for and challenge to the Government as well as ways out of these difficulties about which they could do a great deal at present in the direction in which I have been talking and perhaps also in others I have not mentioned. Will the Government turn their minds towards that? Will they take their courage in their hands and adopt that sort of approach in an endeavour to create work doing these things rather than idling their way through, which is no answer and only adds to existing problems? Will they do for the rest of the country what they have done, for instance, in Donegal in the past few weeks? Will they indicate to other local authorities that all jobs awaiting sanction may now go ahead? Even though I may be somewhat cynical as to how it came about, I am delighted and thank the Government for what has happened in Donegal. We have got the clearance we have been seeking in regard to sanctions for jobs as far back as this time last year. Sanctions have been awaited for many jobs in the housebuilding and construction industry generally. We are now fortunate in my county that we have received such clearance with the indication that all of these things may start rightaway.
: We should have a by-election in every constituency.
: I am not being cynical about this. I would hope that this would apply to every other county straightaway, with the same instructions being given to get on with it, that their sanctions are now all available. That indeed would be answering what I have been saying here last evening and this morning. If all local authorities were given the same clearance on their backlog of tenders awaiting sanction, then the construction industry, which can absorb so many of our unemployed, could and would be activated. Over a period of perhaps six or nine months this would create an entirely new atmosphere, one that would pull us out of this depression. We should not mind whether or not they are in a depression in Europe or America. Our circumstances are not the same. Let us treat our problems in our own way. Let us endeavour to find the cure for our problems within our particular circumstances. Let us not just sit back and say: it is world-wide, what can we do, we are so small and so on. Because we are so small, because we are so far behind in our requirements, because we have available to us a working population and many unemployed workers, we can do what they cannot. That is what we should be doing. There is the need; we have the people and in many cases, we have the materials. That is what we should be doing rather than borrowing, thereby continuing our way down the slippery slope in idleness.
Talking about Donegal, there is one thing I should like to get clear before 6 November. Is it definite that the airport which has been so much talked about recently—and I am glad it has, because I have been talking about it for 25 years—is to be funded in Donegal? I know that the funding will not fall solely on the Government, since there are two funds, the regional fund and also the cross-Border fund from which quite a bit can be obtained provided that the Donegal airport can be seen to—and will, in fact—serve part of the Six Counties as well as Donegal. The Minister will appreciate my anxiety to know this before 6 November rather than later as some ambiguity has emerged from what has been said recently. There is no question about it, this airport is badly needed and two sources of funding I have mentioned are available, as well as the funding from the Government and money from local sources. There seems to be rather a promise about this which, when read closely, appears not so much to be stated as a fact but as a projection of thought.
: The Deputy will be delighted to hear that the Taoiseach has even visited the proposed site.
: I am not aware of that. The question is does he know which site is proposed? This point has not been settled yet and I should like to see it settled. The absolute commitment to it at this stage is the more important thing.
On farming and fisheries, what can one say, except that, despite the excellent contribution of the Minister for Agriculture in the House yesterday, to anybody with any knowledge of it, farming is in a bad way and the industry has been losing very heavily over the last couple of years. Without going into the pros and cons, that is the situation.
Fisheries, an infant industry with great potential, has been hit particularly badly over the last six months although it is recovering a little now. The cause, which is the freedom for Third World Countries to send more fish into our market than can be absorbed, is still there. The Government must be very firm about this if they are to save the industry, let alone expand it. If nothing positive is done with regard to international agreements before next spring, the fishery industry will be in jeopardy.
I finish on the note that we want a Government which will get moving on the matter of getting our people back to work. I say that not glibly, but have been consistently saying it. We should be working on the lines I have mentioned, about which the Minister sitting there is very much concerned. We cannot expect to come out of a depression by idling our way through and spending money for which there is no return.
: I shall be as brief as possible, to facilitate a further Fine Gael speaker, by agreement. I am honoured to be the Labour Party spokesman for agriculture. Our farming community have never been in such a state since the thirties. Some farmers have not the price of a few gallons of petrol for their cars. That is the situation, despite the contribution made by the Minister for Agriculture yesterday. Small farmers are forced to sell their cows for slaughter in order to make repayments on loans which they were advised by the Government to take out as developing farmers, and pushed into by the banks. They now find themselves forced to sell the produce for their livelihood in the years to come.
Much has been said about reducing rates for certain farmers, which is a good and very necessary thing, but that is only scratching the surface. Have instructions been sent to the various county councils not to collect these rates and in certain cases where they have been collected under threat, are they instructed to refund these rates? Further, if, as I am sure will happen, knowing the financial position of my own county council, there is a long delay in repayment of these rates, will the farmers get interest on their money? Announcements are all very well, but my information is that no circular has gone to the county councils instructing them to carry this out.
Prior to the last general election, there was a whispering campaign by Fianna Fáil among farmers in my constituency that the tax would be done away with. Unfortunately, these farmers now know their mistake. Not alone did Fianna Fáil continue the farmers' tax, but they introduced levies right, left and centre—resource taxes and what have you. When Fianna Fáil go to the country, they will see the results of deceiving these farmers.
The reduction in our cow herds is a reduction in a most valuable asset, not just to the farmers but to our entire community. The people worst hit in this recession are our small and medium sized, progressive farmers who have borrowed money on the advice of their agricultural instructors, and on the advice of this Government and of everyone connected with agriculture, to expand and improve their position. They have borrowed at 8, 9 and 10 per cent interest and now find themselves paying 20 per cent. Arrangements have been made to reduce this interest rate by 1 per cent or so, but farmers still must sell off their much needed livestock, equipment, and even land to repay loans.
In relation to the growers of barley and wheat their crops have been rejected by the millers as being unmillable this year because of the bad weather. Somebody should monitor the millers to ensure that they are not milling some of the wheat without paying the proper price for it. People involved in the processing of feed are importing cheap cereals from Britain and elsewhere which are not grown within the EEC but which are grown in the third world and are then dumped on us. The Government should ensure that at least 40 per cent of our barley will be used in the making of cattle feed and so on. If this is not done we may as well stop growing cereal crops because they will be left on the farmers' hands unsold.
In relation to the agricultural community, the Government promised new land structures and Bills. They are now promising them again because of the Donegal by-election but no attempt has been made to set up a land structure policy that would ensure the maximum employment of people on the land. If small and uneconomic farmers could acquire enough land so as to be able to make a decent living it would create spin-off jobs throughout the country, as these people would produce products that would later be processed in the manufacturing industries. Under Fianna Fáil we have been transferring estates which small farmers would have paid for to multinational companies. In my constituency land has been transferred against all the regulations of the Land Commission. No credit can be claimed by the Government and least of all by the Minister for Agriculture for the state of agriculture. The Government have neglected our principal industry, which employs 40 per cent of the people, to such an extent that it is in ruins. If it were a manufacturing industry employing 1,000 people there would be a clamour for assistance out of the depression. We are only scratching the surface of this problem by telling farmers that they will not have to pay the second moiety of rates. If that is the best the Government can do they had better go to the country.
There has been a terrible fiasco in relation to the administration of local authorities. A few years ago Fianna Fáil told us that they would do away with car tax, with rates and everything else. They gave the impression that everything could be had for nothing. Now after three years, the county councils have reached a stage where they have no money for housing loans despite the fact that because of a Government circular to local authorities they encouraged people to build their own houses. Many people have to carry on on a bridging loan if they are lucky enough to get it, because we are not in a position to fulfil our undertaking to pay loans if they build houses. That is true for all the county councils as far as I understand it. In relation to housing people who are unable to house themselves, we have no allocation to start new houses this year and we will have barely enough to complete our ongoing programmes. This is what is happening under a Government who said that they would build houses for everyone.
Our roads have deteriorated. A programme on the television the other night made this obvious to everyone. One could only see one half of the wheel of the bicycle as a man cycled along the road because the other half of the wheel was in a pot hole. That is common throughout the land. The local authorities cannot do anything about it because they have no finance from the Government.
In relation to new house grants, I compliment Deputy Connolly the Minister of State on writing lovely letters but it is not paying the grants. They are not even paying the outstanding home improvement grants. These lovely letters are not much use to the unfortunate people who need the loans. In every area of public responsibility affecting the poor there seems to be a block off on payments. One must wait nine or ten weeks before one can get sick benefit from the Department of Social Welfare. There is no excuse for this. I fear it is deliberate Government policy in order to save money. There are delays in the payment of all health benefits. The medical card eligibility limit is £47 for a man and his wife. Does the Minister seriously say that he is dealing in a humanitarian way with people when if they earn £48, for instance, they cannot get a medical card? Are we serious about dealing with the problems of the poorer sections? Hospital services are being cut back by the impositions on the health boards. Sections in certain hospitals in this city are closing down because of the lack of finance.
This is the Government that tells us we are doing well and that our external assets are increasing. The people in the Government do not have to try to pay medical expenses on £47 a week, they are not waiting six weeks to three months to get their first social welfare payment and they are not struggling to build their own houses and waiting for six to eight months after the house has been completed to get a grant. As regards our external assets having increased I want to quote a comment from an article by Paul Tansey in yesterday's Irish Times when he said:
to say that reserves have improved in these circumstances—
this is a comment on the Taoiseach's speech
—is similar to arguing that a man who borrows £5,000 from a bank and lodges part of it to his deposit account while spending the rest has increased his earnings.
That is the kind of argument we get from Fianna Fáil to puzzle people with figures, telling them that because we borrowed a lot our external assets have increased. If I borrow £5,000 and spent £1,000 of it and put the rest into my current account no doubt the bank manager will say: "You are doing well." That is the kind of fiddling with figures that goes on. It must be apparent to anyone that never in our history was this State in such economic and financial ruins. We have only to look at the daily papers to see the number of firms closing down for one reason or another, the redundancy rate and the unemployment rate.
An interesting fact about the unemployment figure, which is now about 110,000, is that 59 per cent of that figure represents people between the ages of 20 and 44. This the cream of our manhood, the people who are getting married, people trying to provide homes for themselves, people with young families who have possibly undertaken to purchase their own homes. We can imagine their suffering, while not disregarding the suffering of other age groups also. The age groups that should be giving most to our society are unemployed, trapped with house repayments, trying to rear and educate families. We should not look at these figures in the abstract. They represent human beings and we have no answer except to put them on the dole queues. We have produced here no plans to employ these people or ever to give them hope of resuming payments on their homes.
I want to talk about these people and the human misery the unemployment figures represent. We should examine those figures more carefully and not just say they are up 1,000 or down 1,000 this week. All the indications at present are that the present figure will multiply in the coming winter because that has been the normal pattern. Yesterday's papers reflect the trend. I could say that every firm in my constituency have had redundancies this year. Even though in many cases the firms are in good economic standing they still have to lay off workers because of lack of demand for their products.
This situation is a direct result of Government policy. We gave every incentive to private enterprise in all our budgets but did nothing to ensure that the money saved by private enterprise was put back into production and employment. We are told about all the jobs produced, but do they tell us how many more jobs we will have this year when redundancies are taken into account. When I see in the papers about 300 laid off here or 400 there and when I know the numbers in my own constituency I wonder if we are serious or just brushing over the facts. The lay-offs add to the human misery I am speaking of and we should not consider them in the abstract. I feel very strongly about this. Unless the Government now admit that they were foolish to make all these promises and build up the expectancy of the people and unless they take corrective action quickly, the position will become even worse.
I know the Taoiseach wishes to distance himself as far as possible from the manifesto, the famous instrument that returned Fianna Fáil to power, but he must do more than that. He must be man enough to take corrective action now to remedy the terrible situation that he and the Government and that manifesto brought about. I remember the furore in 1977 about prices and about a certain Minister being "Mr. Prices" but since then we had a rise of 18 to 20 per cent in inflation last year and I think 12 per cent the year before and 5 or 6 per cent in the year before that again. All these are on top of the prices that Fianna Fáil complained about. It is the price the housewife pays that counts and the increase in most cases is up to 50 or 60 per cent since this Government came into office in ordinary everyday commodities.
Fianna Fáil, with their usual disregard for the poorer sections, removed food subsidies saying they were unnecessary because inflation was falling. If inflation was falling at that time I think it was the direct result of the action of the previous Government. Certainly, if they were not necessary then they are necessary now. Let Fianna Fáil impose taxation on people who are able to pay in order to restore these food subsidies for the poor who are unable to live on present social welfare rates and the present health board allowances, which are the disgrace of our century. They must realise that 20 per cent of our people are on the poverty line existing on incomes that should have been increased in October. They are living on medical card limits imposed last January and which have no relevance today. Prices have increased by 20 per cent, particularly food prices. Food prices are more important to the poorer sections because they spend a greater part of their money on food.
Dole queues in my constituency are up to half a mile long and towns where there was no unemployment a few years ago have now many people making the weekly trek to the unemployment exchanges. Those people must stand outside in the rain without any protection and there are no facilities to speed up the process. What has the Minister for Social Welfare, a man who has said he is very concerned about social welfare recipients, done about that situation? The Minister, and Fianna Fáil in general, should do something to get those people back to work. Something should be done to give a decent living to the unfortunate poor who must depend on social welfare and other benefits. The Government should not be afraid to tax the people who can afford to pay and there are many in our society who can afford to pay tax.
: I am very pleased to have this opportunity of addressing the House for the first time in my capacity as Minister for the Environment in this confidence debate. I am particularly conscious of the major role which both my Department and local authorities must play in order to stimulate economic development and so meet the challenges of the eighties. Their combined contribution to the economy is immense, affecting virtually every person in one way or another—whether by reference to the houses or the general environment in which people live or as the providers of essential infrastructural services such as water and sewerage facilities and roads which are essential prerequisites to the provision of industry.
And, of curse, such new or expanded industry must be the life blood of a young active and growing population, but let us not forget that these infrastructural services are equally essential to the prosperity and well being of our agricultural and rural community. Small wonder that my Department and local authorities together this year spent an estimated £770 million.
I regard the building industry as one of my chief responsibilities as Minister. Considerable progress has been achieved since Fianna Fáil resumed office in 1977 and it is my firm intention that there should be even greater progress in the years ahead. Output in the industry increased by 30 per cent between 1977 and 1979, when it reached a record estimated level of £1,319 million. Between April 1977 and April 1980 direct employment in the industry increased by 7,000 to 84,000. It is estimated that employment in building materials supplies and other ancillary industries increased by an additional 2,000. Public capital expenditure affecting the building industry was estimated some months ago at £724 million in 1980 representing 63 per cent of the Public Capital Programme, compared with 58 per cent in 1977.
Some weeks ago, my predecessor announced an increase of £12 million in the funds available for local authority housing and a further £4 million for State housing grants in 1980. A further significant development in recent weeks affecting the building industry was the Government's commitment to the maintenance of the December 1979 level of employment in the industry by the end of 1981 in the event of the ratification of the proposals for a second national understanding. The proposals outline wide-ranging measures to be taken by the Government and the private sector to achieve this objective and at the same time ensure that resources are directed towards worthwhile projects. Detailed consideration of some of these measures has already advanced sufficiently to enable further announcements to be made by the end of this month in the event of the proposals in the national understanding being ratified. The proposals relating to the industry have been drawn up in consultation with their representatives.
It is pertinent to ask the question: what has been the Coalition's record relating to the industry during the mid-1970's? The short answer is "appalling". Let me elaborate. Output in the industry dropped by 1 per cent in 1974 and by a further 7 per cent in 1975. It started to recover in 1976. During this period direct employment dropped by 4,000 in 1974 and by a further 5,000 in 1975. The Coalition Government were completely unconcerned about the fate of these workers who were thrown on to the dole queues. Public capital expenditure affecting the industry was cut by 4.5 per cent in 1974, by a further 7 per cent in 1975 and by a further 6 per cent in 1976. Is it any wonder that the industry was in a shambles when we resumed office in 1977?
It is my firm intention to prevent any recurrence of the disastrous fall in output and employment which the industry suffered in the mid-1970's. As a direct consequence of the serious rundown of the industry in the years 1974 to 1976, this Government's initial efforts to increase output and employment were seriously hampered, particularly by skill shortages, which were the result of the large scale laying off of tradesmen and the failure to recruit a sufficient number of apprentices in those years. This Government have no intention of permitting the large scale redundancies in the industry which their predecessor did and are prepared to honour their role in securing the medium and long term future of the industry. It is important to emphasise that the Government's commitment to the industry extends to much more than a mere life saving exercise, though such assistance would have been very welcome in the mid-1970's. At present an assessment of housing needs to cover the period to March 1985 is being carried out and the housing programme over the next few years will be based on the results of this assessment, which will of course have regard to the large increase in our population revealed in the April 1979 census. In addition, a major survey of the training and employment needs of the industry for the period 1980-1985, commissioned by AnCO, is being carried out.
My message therefore to the building industry is this: you have no need to doubt this Government's commitment to your industry. The outlook for the future is bright. In particular the need for the development of infrastructural services over the next few years has clearly been established. We must look to the future with the sort of confidence which directed that the capacity of the cement making plant at Limerick be increased dramatically. I welcome this development as a vote of confidence in the future of the industry.
Turning to housing, which represents 40 per cent of the output of the building industry, the Coalition Government allowed the annual rate of new house completions to drop from 26,900 in 1975 to 24,000 in 1976 and to 24,500 in 1977. Since then there has been steady progress to 26,500 in 1979. Despite the widespread gloomy predictions earlier this year, it now seems that we will achieve about the same level of completions this year as last year. Steps have been taken in recent months to step up the level of starts and work in progress so that the 1981 programme can get off to a good start. In the private sector over 20,000 houses were completed for the first time in any year last year. Again, we expect to exceed the 20,000 mark this year.
Building societies, the largest contributors of house purchase finance, are dependent to a very large degree on the level of inflow of new funds from investors in their efforts to assist the Government housing programme. In the early part of this year, although inflows were at a low level, societies were able to maintain a high level of approvals because of the exceptionally high inflows during 1979. Following an increase in the interest rates offered by the associated banks and concerned at the reduced level of inflows, building societies informed my Department in April of this year of their intention to increase both the investment and mortgage rates. Having considered the report of a working party set up to examine the situation, the Government were extremely conscious of the heavy additional burden which would otherwise have fallen on mortgagors. In the absence of subsidy the additional repayments on an average loan of £16,000 would, for example, have been approximately £30 per month.
While the primary aim of the subsidy was to eliminate the hardship which would have been caused to borrowers, the subsidy also has had the desired effect of increasing inflows to societies, enabling them to make loans amounting to a record £126 million in the first six months of the year, thus ensuring that they are well on the way to contributing as envisaged to the financing of the Government's housing programme. I am pleased that the downward trend in interest rates generally in the recent months has made it possible to terminate the subsidy with effect from 1 October 1980. Following on the further reduction in bank interest rates by the Associated Banks and the response of the Irish Building Societies Association to the reduction, I have invited representatives of the Irish Building Societies Association to a meeting in my Department tomorrow afternoon for a discussion on their interest rates and future policy.
When the Government came into office in July 1977, the normal maximum loan which a local authority could advance was £4,500. It has since been increased on three separate occasions, the latest of which provides for a maximum loan of £12,000 with effect from February 11980. The income limit in July 1977 was £2,350. This has also been increased on three occasions and at present it stands at £5,500. Expressing these increases percentage-wise, we find that the loan limit has increased by 166 per cent and the income limit by 134 per cent. In contrast the Coalition Government allowed the income and maximum loan limits to remain unchanged between September 1973 and June 1977, despite the fact that new house prices and earnings more than doubled in that period. The increase in the limits made by the present Government is evidence of the great importance that we attach to the local authority house purchase loan scheme.
The scheme, I am glad to report, is flourishing and continues to expand. As evidence of this, we need only to compare expenditure in the last few years. In 1977, the year the Government took office, it was £17 million, in 1978, £27 million, and in 1979 it increased to £44 million. The provision in the Public Capital Programme for 1980 was £58 million.
It is the intention of the Government that the local authority house purchase loan scheme be kept under continuing review so as to ensure that it fulfils the purpose for which it is intended.
The low-rise mortgage scheme, under which subsidised loans are made available to certain categories of tenants and prospective tenants of local authority houses, has operated succesfully since November 1976. With effect from 1 February 1980 the maximum loan obtainable by qualified tenants, tenant purchasers and persons on the waiting list was increased from £9,000 to £12,000. A person allocated a new local authority house may obtain a loan up to the full cost of providing the house. To take account of the increase in the maximum loans, the maximum subsidy was increased from £9 to £12 per week during the first year of the loan. Consequent on the increase in the maximum amount of loan, the number of applications received has increased considerably and I am confident that the allocation of £5.25 million for the scheme in 1980 will be fully expended.
As regards the local authority house improvement loan scheme, the maximum loan payable was increased to £4,000 and the qualifying income limit increased to £5,500 with effect from February 1 1980. The maximum loan which may be advanced by a local authority without formal security is now £1,000. When the Government took office it was £200. It has therefore been increased by 400 per cent. The availability of these loans can, I think, make a major contribution to the conservation of existing housing stock, and the new loan and income limits are sufficiently realistic to encourage persons to improve their housing conditions.
The additional £4 million which the Government made available some weeks ago for housing grants brings the total allocation for the current year to £27 million, a sum which exceeds last year's record expenditure of £24.6 million. We expect to pay a record number of £1,000 grants this year to first time owner-occupiers. Deputies opposite might also like to compare this figure of £27 million to the £4.95 million provided by the Coalition Government for this purpose in their last budget in 1977. As in so many other areas, their criticisms sound so hollow when one remembers their own record in Government.
In the past few years it has been Government policy to maintain the local authority housing programme at a consistent level of some 6,000 completions a year. The actual figures for the last three years have been 6,300 in 1977, 6,100 in 1978 and 6,200 in 1979. To achieve our completions target we have aimed to keep the number of units in progress at about 8,000. At the end of 1979, because of the higher number of completions late in the year, work in progress fell slightly below 8,000 dwellings; but it was restored to the required level almost immediately and has been maintained at above 8,000 throughout the year.
However, expenditure on the programme has been running far in excess of the level anticipated at the beginning of the year. This is borne out by the present level of draws from the Local Loans Fund. At the end of September a total of £81.3 million had been drawn as compared with £54.9 million for the same period last year.
This high level of expenditure was due to a variety of inter-related factors—for example, the unusually fine weather in the early part of the year gave rise to a high level of building activity. The programme was also affected by the continuing escalation in cost increases. Average tender prices have been rising at a rate of about 20 per cent per annum.
When one considers that the average price of providing a house in the Dublin inner city area is of the order of £35,000 to £40,000 one readily can appreciate the heavy strain that cost inflation is imposing. Fortunately, there is some recent evidence that cost increases are abating somewhat as a result of more competitive tender prices. It became clear as the year progressed that a number of authorities were experiencing difficulties in meeting existing commitments on their housing programmes and that the authorised capital expenditure which was allocated to authorities in March last would not be adequate to meet requirements for the rest of the year.
My predecessor carried out a comprehensive review of the entire capital situation as a result of which it became apparent that further capital would be necessary both to alleviate the difficulties of those authorities who were encountering financial problems on their existing programmes and to start a sufficient amount of works to maintain the programme at a satisfactory level. The Government agreed that a further £12 million should be allocated for the programme. This sum, of which £9 million will be provided by the Exchequer and £3 million by way of overdraft borrowings, has now been allocated between the various local authorities.
I should like at this stage to refer to the Dublin Corporation housing programme. An initial capital allocation of £32 million was made available to the corporation for their 1980 programme. They were granted a further £3 million out of the additional £12 million provided, bringing their total allocation for the year to £35 million. Having regard to the special circumstances associated with the housing problem in the Dublin area, almost one-third of the total capital available was allocated to the corporation although the estimated housing needs are less than a quarter of the national total. Up to 31 August 1980 a total of 883 houses were completed by the corporation and it is anticipated that further completions for the remainder of the year will bring the total up to 1,500.
I have referred already to the high cost of providing houses in the inner city area. The re-vitalisation of this area will continue to be a costly and complex operation having regard to the nature of the property interests involved and the costs of acquisition and compensation. There is, however, an urgent need to continue the redevelopment programme in the inner city area. The problems of the area are wide-ranging and their solutions require a co-ordinated approach on a number of fronts particularly in the area of housing, industrial development, transport and so on. Since this Government assumed office a considerable degree of progress has been achieved. While the problems in the area are extensive and are likely to continue for some time to come, I can say that Government will strive as far as resources permit to continue the present housing redevelopment programme.
To ensure that the programme is administered on a cost efficient basis and that available resources are employed to best advantage, new cost control procedures were introduced in July this year. Compliance with these procedures will contribute to the speedy development of a computer based databank which will be an extremely useful tool in identifying areas where economies can be effected.
The contribution of the public road network to the agricultural, industrial, commercial and social life of the community has been growing in importance in recent years. The growth of our economy, with the attendant growth in road traffic, has placed a severe burden on the road network, emphasised particular deficiencies in the system and the adverse effects which these deficiencies can have on the achievement of national development.
The road development plan which was published last year outlined a programme of work designed to eliminate the existing deficiencies in the road system and to cater for anticipated growth in the more important sections of it. The plan provides for flexibility in the timing of projects, having regard not merely to the availability of finance but to progress by the road authorities in planning, design and the acquisition of land by agreement or by compulsory purchase. I should like to put on record that, taking these factors into account, it has been possible to allocate funds this year to some major schemes which were not originally scheduled to commence before 1981 in place of others which the road authorities might otherwise have commenced this year. The total grant allocations for roads in 1980 announced after this year's budget amounted to £53 million. Increased investment in roads in the current year is envisaged under the terms of the draft proposals for a second national understanding.
The road development plan acknowledges that the first call on financial resources must be for the preservation of the road infrastructure up to a generally satisfactory level of service. This is necessary not alone from the point of view of the condition of the road structure but also to ensure continued benefit from previous investment in the network. The preservation of the roads infrastructure demands an adequate programme of maintenance and strengthening. Earlier this year city and county managers were asked to pay particular attention to the question of maintenance especially in relation to the national routes which are those most used by the public. The result has been a noticeable improvement in the standard of road maintenance around the country in recent months. However, my Department have arranged for the implementation of a special programme of strengthening of sections of the principal routes which are proving to be incapable of carrying the increased volumes and weights of present day traffic.
In furtherance of the Government's policy for the development of the road network as outlined in the road development plan, I will in the coming months be preparing a programme of works for 1981 which I hope will go a long way towards eliminating deficiencies, with particular emphasis on the principal routes and ensuring a satisfactory standard of maintenance. This programme will in particular place special emphasis on strengthening the existing road structure and on the improvement of roads which will provide the infrastructural base essential for industrial development. The Government are aware of the invaluable supplementary benefits that will be derived from a full roads programme in that it will create activity in the construction industry, generate employment both on-site and off-site and utilise materials and equipment of Irish manufacture.
As well as public roads the country has a substantial network of non-public roads which have considerable significance for the agricultural community. Since the Government took office in 1977 we have sustained the local improvement scheme under which grants are provided for the construction or improvement of accomodation and bog roads for the benefit of groups of landholders. The scheme also covers minor drainage works. As well as benefiting local land holders, the scheme provides a useful source of seasonal employment for workers in rural areas. Over the last three years, grants totalling £6.5 million were allocated under the local improvement scheme. A recent EEC regulation enables EEC funds to be applied to roads of the type currently assisted by the local improvements scheme in the "western" counties. In the coming weeks I will be taking the necessary measures to ensure that we get the maximum possible benefit from the EEC Scheme.
Since 1977 the Government have stated on a number of occasions that we are open to the idea of private sector involvement in the improvement of our road system. The Local Government (Toll Roads) Act, 1979, enabled local authorities to charge for the use of a toll road and to enter into agreements with private interests for the design, construction and operation of a toll scheme. Under the provisions of the Act local authorities and private enterprise are free to develop plans for toll projects. The Act has already paved the way for making of a toll scheme by Dublin Corporation related to proposed provision of a toll bridge over the river Liffey, the construction of which will be financed by a private company.
Developing and improving our road infrastructure aims not only at promoting economic development but also at improving the level of safety on our roads. Apart from the misery and suffering which result from road accidents, the economic cost of accidents places a considerable burden on our resources. In 1978, for example, it was estimated that the overall cost of road accidents to the community was of the order of £75 million. Since the human factor is the dominant one in road accidents, improvements to roads must be paralleled by measures to influence road user behaviour. Perhaps the most important of these measures was the Road Traffic (Amendment) Act, 1978, which has enabled a determined drive to be made by the Garda to deal with the menace of the drinking driver on our roads. Further legislation is at present being drafted to reduce the scope for offenders to evade conviction for drunk driving offences on mere technicalities.
The provision of water and sewerage facilities is one of the more important services for which I have assumed responsibility. Adequate services are the vital cornerstones on which a number of other important programmes must be built, including industry, housing, tourism and agriculture. I am very conscious of the fact that without adequate water and sewerage services related programmes can be seriously inhibited. On the other hand, the very availability of good services in an area is an invitation and incentive to people with initiative to use those services for their own benefit and the general advantage of the local community. A comprehensive sanitary services programme must take into account not only the immediate needs of the community but also allow for the rapid growth taking place in the economic and demographic spheres, especially the increasingly rapid rate of industrialisation and urbanisation, and allow the necessary capacity to cater for future needs.
This Government have recognised the vital importance of the sanitary services programme and have steadily increased the public capital programme provision for water and sewerage programmes. This has enabled the approval of some 138 water and sewerage schemes estimated to cost more than £90 million in the last few years. It is my intention as incoming Minister that extra funds will be provided as necessary for this service. This will ensure that the programme as a whole will maintain its momentum, safeguarding existing employment and facilitating the financing of new schemes. This scale of provision for water and sewerage schemes will be adequate evidence of the Government's and my resolve to keep the sanitary services programme at a level which will ensure that essential needs will be met as early as practicable and that the increasing level of employment on sanitary services will be maintained.
Deputies will be aware of the vital role of private group water schemes in bringing piped water to rural houses and associated farms. The level of group scheme activity has been running at a record high since the Government increased grants for these schemes in November, 1977. Seven thousand nine hundred and thirty grants were paid in 1977, 10,770 in 1978 and 10,944 in 1979. I am at present closely examining this grants scheme with specific reference to a new FEOGA aid scheme for rural water schemes in the west of Ireland. While I have not yet fully completed my examination it appears likely that I will seek the go-ahead from the EEC to announce greatly improved grants for group schemes in the west. This will ensure even more rapid progress in attaining the goal of providing piped water in rural areas.
While I am new to the Department of the Environment I am of course very familiar with the structure and financing of local authorities. I am aware that much of the criticism of local finances has centred on the 10 per cent limit imposed on rate increases. Quite honestly there has been gross misrepresentation of what the effect of this 10 per cent is; so much so that it is hard to blame the general public if they are confused on this matter. The 10 per cent is the upper limit placed on the amount by which local authorities could increase the rate in the £ for 1980 over the rate in the £ struck by them for 1979. It is not, in any sense, a limit of 10 per cent on the increase in the amount local authorities have to spend in 1980 as compared to what they had to spend in 1979. The direct effect of the 10 per cent limit is to be found in the amount the individual has to pay in rates in 1980 as compared to what he had to pay in 1979. In general, that amount on the same effective valuation as in 1979 cannot be more than 10 per cent higher than it was in 1979.
What then are the critics of the 10 per cent limit saying? In Plain words, what they are saying is that the small shopkeepers up and down the country and many other categories of ratepayers should be paying more in rates this year than they are, in fact, paying. There should be no confusion about this. When the speakers opposite criticise the 10 per cent limit either inside or outside this House, they are advocating a heavier rates burden for all these people. If this is what they seek, they should be quite specific about it. They criticise the limit but never go on to say what the direct result of a higher limit would be.
But to come back to what local authorities have to spend. The upper limit of 10 per cent is put forward by Opposition spokesmen as the measure of the extra money which local authorities have to spend this year as compared to last year. It is no such thing. The bulk of the spending by local authorities on the major infrastructural services in any year is classed as capital expenditure and is outside the direct scope of their current rates estimates altogether. But even that part of local expenditure which is within the scope of the annual rates estimates is not limited to an increase of 10 per cent over 1979. The figures speak for themselves. In 1979 local authorities were able to budget for a total expenditure of £437 million on non-capital services. In 1980 they have been able to budget for expenditure of £511 million. That leaves us in the position that the non-capital expenditure of local authorities in 1980 is £74 million higher than they were able to budget for in 1979. This is not a 10 per cent increase. The increase is 17 per cent. Let me repeat this. Local authorities this year have been able to budget for expenditure on their non-capital services alone of £511 million or 17 per cent more than they were able to budget for in 1979.
The 10 per cent limit on rate increases does not mean either that the Exchequer's contribution to local authorities in lieu of domestic and other relieved rates has been limited to 10 per cent over the 1979 contribution. The figures are those in the Departments Estimates under subhead P—Grant in Relief of Rates. While the rate in the £struck by local authorities is limited to 10 per cent over 1979, the Exchequer bears the full cost of giving rates relief not alone on valuations which were there before 1978 but also on the new valuations that have come along since. The result is that the grant under subhead P amounts to £106.565 million this year. This is an increase of 15.7 per cent on the corresponding amount of last year's grant. Local authorities are not being short-changed in any way on this. Every last penny that they would have collected from the ratepayers if we had not relieved them of the rates burden is paid to the local authorities, and it is paid within the year. This is an important point because it means that there is a definite temporary cash bonus involved. This comes about because in the nature of things there was always a certain percentage of domestic rates which could not be collected within the year. There is no hold back on the grant payment.
I am very concerned to ensure that the various development programmes—both those in the local government and other public sectors and those in the private sector—will proceed with proper regard to protection and improvement of our physical environment. As the House is aware, this Government have undertaken an in-depth examination of the whole question of environment policy—what the objectives are, and the implications and the means necessary for achieving the objectives. A discussion paper on the subject entitled Towards an Environment Policy, which was prepared by the Environment Council, has already been published. The council are now preparing more definitive advice on the appropriate aims of policy and recommendations in the main programme areas concerned. This work will be an important landmark in bringing about a better understanding of the complexity of environmental issues, as well as forming a sound basis for the future evolution of policy in this area.
I am having a general examination of the needs for the improvement and modernisation of environment law carried out in my Department. It is my intention that proposals for a first instalment of new legislation based on this examination will be introduced in the near future. I have always felt that among the environmental pressures and problems which we have to cope with, the situation regarding littering is the least excusable and the most demoralising. There are no great financial or technical constraints on dealing with this problem, but there is need for a radical change of public outlook in the matter. This can lead to a public willingness to make the relatively small effort required on the part of the individual to transform the appearances of streets and of places of public resort in both town and countryside. I will be giving close attention to the question of the means to be adopted to bring about this change.
A water pollution problem which has been the subject of extensive media coverage in the recent past is that of Lough Sheelin, County Cavan. The problem centres around the disposal of excess slurry arising from extensive pig production in the Lough Sheelin catchment area. An inter-Departmental committee on which my Department was represented investigated the matter and reccommended that the only realistic short-term solution to the problem was the introduction of a transport subsidy scheme to remove excess slurry to recipent farmers outside the Sheelin catchment. I am pleased to say that arrangements are currently being made to get this scheme going as a matter of urgency. The scheme will operate for a period of two years and will be financed by a special grant from my Department's Vote.
My Department, in consultation with the Department of Industry, Commerce and Tourism, the IIRS, IDA and the Geological Survey, have been taking steps to solve the problem of the safe disposal of the increasing volume and variety of waste which are now arising for disposal as a result of increased industrialisation. Local authorities have been requested to assist in the provision of industrial waste disposal facilities in the same way as they have facilitated national industrial development in the past by the provision of essential infrastructure such as water supplies, sewerage, roads and housing. The European Communities (Waste) Regulations, 1979 which came into force on 1 April 1980 make local authorities responsible for the planning, organisation, authorisation and supervision of waste operations in their areas and require them to prepare waste disposal plans. Local authorities have adequate powers under these regulations to ensure their implementation. A study prepared by the IIRS at the request of my Department and the IDA on hazardous waste disposal has indicated the waste disposal arrangements which are required to cater for the various types of industrial and hazardous wastes now arising in the country. My Department in association with the other Government agencies concerned are considering how the recommendations can be implemented. A technical working group comprising technical officers from my Department, the IIRS and the Geological Survey Office have been set up to study a dry mine method for the disposal of solid toxic waste. I expect to receive a report from the group within two months. It is clearly essential, with a view to ensuring that proper environmental protection standards are observed and that the national industrial development programme is not hindered, that suitable facilities exist for the safe disposal of all types of industrial waste.
In April this year my colleague Deputy Tunney, T.D., Minister of State at the Department of Education, announced a national programme for the provision of recreation centres. Nineteen centres will be provided by local authorities in association with the Department of Education, each centre costing in the region of £200,000-£250,000. These centres will be located on sites made available by the local authorities. Two-thirds of the cost will be met by the Department of Education and the balance of one-third via loans made to local authorities by my Department. These centres will provide much needed recreational facilities for the public and their construction will boost employment in the building industry. It is my intention that there should be no delay in getting this worthwhile scheme under way and sanctions to the expenditure by the local authorities nominated are currently being issued.
In the past three years some £4 million worth of new library projects have been approved. This is more than double the total capital investment in libraries for the previous ten years. Revenue spending on libraries from local authorities' own resources has also been increasing in real terms and will exceed £11 million in the current year. I am confident that this increased financial commitment to libraries is making for very real improvements in the quality and the spread of this important service.
The Government decided in February 1980 that the inner city group and fund should be the responsibility of the Minister for the Environment. The group were reconstituted and had their first meeting in May 1980. They have been actively engaged in assisting a number of worthwhile projects in the economic, social and education fields. A sum of £1 million to underpin the inner city programme was made available to the group. Under the programme site subsidies are being paid to enable small factories to be built in the inner city; assistance is being given to local co-operatives to enable them to obtain suitable management expertise and to acquire premises; local youths are being employed on environmental improvement works; schools in the area are being improved and financial help is being given to enable recreational facilities to be provided for the youth of the area.
A special employment scheme is at present being drawn up for the relief of unemployment in the inner city. Under this scheme any employer who employs a person from a special inner city register will receive a weekly financial premium. It is estimated that up to 200 persons could be employed under this scheme. The agreement of the EEC Commission to the scheme is being sought at present. The Inner City Group have also recently set up a special task force to examine the practicalities of job-creation in both the short and long-term in the port area. The task force are representative of the various Government Departments and agencies involved. I regret that by way of conclusion I can offer no joy to my colleagues on the opposite side of the house. I can easily understand why, with their consistent abysmal performance when in office, particularly in relation to the building and construction industry, they so easily become the forcasters of doom. Let me clearly put on record the firm commitment of the Government and myself to ensuring the future development and wellbeing of the building and construction industry which is so essential to the economy, to ensuring also a high level of housing completions each year and to ensuring an expanded programme of infrastructural services in order to further stimulate economic development.
: Ba mhaith liom glacadh leis an deis seo chun comhghairdeas a dhéanamh go pearsanta leis an Aire nua Comhshaoil as ucht a cheapacháin. Guím rath Dé air. Chomh maith leis sin, a Leas-Cheann Comhairle, os rud é nach raibh mé anseo an tseachtain seo caite, bheinn an-bhuíoch díot dá gcuirfeá mo chomhgháirdeas chuig an Ceann Comhairle nua.
It must be admitted that this debate is taking place against the background of the worst economic recession that has hit this country in half a century. Every sector of the economy is reeling now under the force of an unprecedented combination of adverse factors, and all indications are, unfortunately, that the situation is going to continue to get worse. It is well to know that, unlike previous recessions and the most recent one in 1975, the present recession is hitting every sector of the economy, industry, agriculture, and tourism in particular. This year 1980 has been absolutely disastrous for all these sectors and no amount of propaganda of the "whistling past the graveyard" type of which the Taoiseach in particular is such a past master can refute the basic fact that this country is in the throes of a frightening economic crisis. We all know that industry is going through a difficult period with an increasing rate of redundancies, short working weeks, closures of some industries and a rising and very serious unemployment rate.
Recent figures have brought out that 1980 was the worst year for Irish tourism since the establishment of the national tourist board, Bord Fáilte. The report published yesterday from the Cork-Kerry region, the Ivernia region as it is called, which can be regarded as one of the premier tourist regions if not the premier tourist region in this country, indicated that the number of tourist inquiries coming through their offices in the 1980 season was down by 50 per cent. While it is true that not all bookings are done through the tourist offices and that not every tourist makes inquiries through the regional tourist offices, nevertheless, that is a clear reflection and a confirmation of other figures that have been coming through, such as those for airline traffic, shipping traffic and so on. Tourism is a very important national industry with very wide ramifications and a very high multiplier effect, and it has gone through a very serious crisis during 1980.
The worst feature of the present serious economic crisis confronting this country is its impact on the most important sector of our national economy, the most important industry we have or will ever have, that is, the agricultural industry. The situation facing agriculture today and the prospects facing the farming community are, to put it mildly, frightening. The Government will have to face up to this grim situation before it is too late. Putting it simply, the Government have a serious agricultural crisis on their hands which demands immediate and appropriate corrective action. To put it in a nutshell, the Irish agricultural industry is crippled and the farmers have their backs to the wall.
Let us look at some of the basic facts of this industry. The recently published 1975 farm survey report paints a grim but factual picture of the drastic decline in farming incomes in recent times. For example, in 1979 farm incomes fell 23 per cent and all indications are that in 1980 there will be a further drop of 20 per cent. The most significant figures emerging from that report are that in 1979 the average family farm income was £54 per week, 70 per cent of all full-time farmers have less than £80 a week; almost 50 per cent have less than £60 a week and 60 per cent have an income lower than the minimum agricultural wage rate.
Over the past two years farming costs have increased by 30 per cent while the prices the farmers received for their products increased by only 5 per cent. This situation has led to the inevitable and very real crisis that confronts the farming industry at present. It is estimated that the fall in farm incomes in 1979 was £150 million, of which £50 million can be attributable to reduced prices which can only partially be attributed to domestic factors within the control of the Government. One hundred million pounds of this amount can be attributed in almost equal proportions to increased interest charges and increased domestic costs. Both of these are a direct consequence of mismanagement of our economy and they are the result of a high inflation rate generated by the Government's mismanagement.
The biggest element in increased farming cost has been a rise of 36 per cent in expenditure on purchase concentrates and an increase of 14 per cent on fertilisers. It must also be noted—and this is a very significant factor—that interest payments on farm investment almost doubled between 1977 and 1979.
It must be admitted that these facts and statistics, although they do not portray the real problems confronting our farmers, are a scandal and a shocking indictment of national policy in a country where agriculture not only provides employment either directly or indirectly for almost half the population, but also accounts for 36 per cent of our total exports. That figure does not tell the whole story because the import factor in relation to agricultural exports is very much lower than it is for other manufacturing industries and the exports generated therefrom.
It can be validly argued that the situation in which the agricultural industry finds itself today represents the inevitable and cumulative results of the disastrous economic policies pursued by this Government over the past few years. It must be remembered that the crisis confronting our agricultural industry did not happen overnight. The indications were there for all to see and they have been getting much clearer every month. For the last 18 or 24 months it has been obvious that all was not well in Irish agriculture. Instead of facing up to the situation and supporting in a realistic way our greatest national industry, agriculture, the Government have shown a callous disregard for the problems facing farmers. This was proved by the way they have continually imposed new penal and inequitable taxes.
The recession in agriculture was well under way by the time the present Taoiseach took office. His Government had the opportunity of assessing the situation and they had ample opportunity to introduce appropriate measures when they brought in the first budget in 1980. Notwithstanding the evidence of falling farm production and incomes, this Government went ahead with a policy of reduced spending on agriculture as well as increased taxation on agriculture. For instance, the subsidy on lime was abolished while the subventions were cut in respect of land drainage, the farm modernisation scheme, the farmer retirement scheme and for CBF. In addition more farmers were brought into the tax net. For the third year in succession current Government spending on agriculture has been reduced in real terms. All of this indicates a bias against agricultural investment in so far as official thinking is concerned. If this is the case, it represents a disastrous error in Government strategy.
The adverse effects of the serious national economic recession that we are experiencing are reflected in the agricultural industry not merely in terms of the catastrophic decline in farm incomes and other problems arising therefrom but it is reflected also in another way, in a way that will have the most serious consequences not only for agricultural but in economic and social terms generally. Farmers are being forced to sell stock, including breeding stock, to meet present debts and to meet other urgent commitments. Recent statistics published by the DSO confirm an alarming drop in breeding herd numbers. This report is the result of a survey that was carried out in June and it has come to hand only within the last week or so. The report confirms a decline in numbers in so far as every category of productive stock is concerned. For example, the total beef cow herd is down a further 35,000 or 7.4 per cent compared with June 1978. The most serious situation of all is that in respect of the dairy cow herd, which is down by 37,000 or 2.3 per cent. Total cow numbers have fallen by 3.5 per cent to £2 million, while the total cattle numbers are down 3.4 per cent to 6.9 million. The sheep flock, too, continues to fall. The breeding herd is down by a further 1.8 per cent to 1.5 million.
In regard to cereals, the wheat acreage is estimated to be down by 3.2 per cent while the oats acreage is estimated to be down by 9.1 per cent.
All of these factors indicate clearly the very serious situation which the Government are facing. I have been here long enough to recall the sixties when the late Mr. John Feeley led the farmers to the gates of Leinster House. I recall also that during that period members of another farming organisation marched from west Cork to Dublin and were allowed sit for nine weeks outside the office of the Minister for Agriculture. It is ironic, if not significant, that the man who was then the Minister for Agriculture is now the Taoiseach. However, one does not need official statistics to realise the grim situation in which the Irish farmer finds himself. Every Deputy here who represents a constituency which consists even of only a small number of farmers must be well aware of the facts. The Government, too, must be aware of the situation, though up to now there is little if any indication of their understanding and appreciation of how bad that situation is.
For almost 20 years I have represented a constituency which has a rural dimension. About 25 per cent of the constituency is made up of the rural area of east Limerick. I need only drive through that area or through any farming area anywhere and talk with farmers to realise what the position is, but what is really alarming is the manner in which the Government have reacted to this crisis. During the past couple of weeks there was an announcement by the Minister for Agriculture of a new package which, we are told, is designed to alleviate the situation in the farming industry. But this package is not worth anything. It is only scratching the surface of a very grave problem.
In recent weeks the farming organisations have been spelling out clearly the very serious situation facing the industry. There have been a number of meetings with the Government in this regard, but any Deputy who has even a little knowledge of farming will realise that the picture that has been painted by the IFA and by the ICMSA is not exaggerated. Their assessment of the situation has been realistic and reasonable and I support fully the case they are making for a special deal from the Government to alleviate the problem and to put this vital industry back on the road to recovery.
A number of the demands being made by the farming organisations represent no more than basic requirements. For example, there is a demand for the cessation of taxation on anything other than what can be determined as actual farm income. This reminds one of the resource tax and of the proposal of some time ago of a sales tax. These were disastrous decisions which had a serious effect on the morale of the farmers. Any tax which is not based on productivity and on profits cannot be justified. Therefore, the Government must forget about any attempt to impose a sales tax, or a resource tax or any tax that is not based on profit.
There is also the reasonable and valid demand from the farmers for a devaluation of the green £. We are entitled to this. It is a matter to which the Government must give serious consideration because devaluation would be one very effective means of improving farm incomes rapidly.
Another matter causing concern to farmers, despite what has been said by the Minister for Agriculture and assurances given by the Taoiseach, is the fact that banks and financial institutions are not making a real effort to assist the farming community to overcome present difficulties. Many farmers have told me of the extreme pressure exerted in recent months by local bank managers from whom they had raised loans. I also understand that pressure is being exerted upon farmers in certain areas to pay their rates, and assurances were given by the Government in respect of this matter also. I plead for a better understanding by the government of the grim situation now facing farmers and ask them as a matter of urgency to ensure that the banks, financial institutions and, in respect of rates, county councils, lay off and give a breathing space to farmers. I am aware of the real human problems of the farmers as a result of the drop in incomes to which I have already referred. Difficulties have been exacerbated by the adverse weather conditions of the current season, although I am not implying that the Government are in any way responsible for the weather.
: I am delighted to hear it.
: The Minister of State will confirm that the very bad weather conditions have exacerbated the situation and added to the overall crisis. This factor must be taken into account and there is a need for sympathy and understanding of the problems confronting the farming industry on the part of all sections of the community. Unfortunately, in recent years the farming community have become the most maligned and least understood sector. People forget that, despite the progress which has been made during the past two decades in the industrial and other areas, agriculture is still the foundation of our national economy and its contribution to the development of exports and the provision of employment is vital to the economic survival and progress of the nation. There is a lack of understanding and an impression abroad among the non-farming sections that farmers are living in the lap of luxury and that money is pouring down upon them like manna from Heaven. It is forgotten that circumstances can vary from year to year and can seriously upset a farmer's annual income. We need the type of Government leadership which will ensure on the part of all sections of our community a full understanding of the vital role of agriculture in our economy. In the present world situation and with a growing economic recession hitting industry throughout the western world, the Government, Dáil Éireann and all our people must realise that the greatest hope and the greatest potential we have for developing our national economy depends on exploiting the land, our greatest national resource.
There are numerous other problems confronting the country at present but I felt in conscience that I must advert at length to the agriculture industry, because I am convinced that it is faced with a serious crisis which will have frightening economic and social implications and repercussions unless immediate corrective action is taken by the Government. I appeal to the Taoiseach and the Government to heed the very reasonable case put to them by farming organisations. These organisations have been adopting a most realistic, reasonable and constructive approach to the crisis facing agriculture. The Government must take action to solve the immediate problems but we cannot lose sight of the longer term problems. A directive must be issued to banks, the ACC and other financial institutions, as well as to county councils in respect of rates, that they must not pressurise farmers at present. Certain financial institutions were rushing to lend money to farmers a couple of years ago and are now turning the screws. A message should go out to farmers to hold fast to their holdings and stock and the Government must ensure that no farmer is forced out of business because of the pressure of problems now being confronted. Let us have a devaluation of the green £ and a completely new approach to the matter of farm taxation.
The Government can also help in the matter of the high interest rates which are crippling the agriculture industry. As far as I am aware from inquiries I have made, we have the dearest agricultural credit in western Europe. There must be a new look at this situation and reasonable interest rates appropriate to the situation of agriculture here must be brought into effect.
Another matter that has been referred to in recent times, and which reflects the lack of national policy in relation to agriculture, is food imports. Agriculture is our most important industry. We have the land, the climate and the natural conditions which are conducive to agricultural production and, indirectly, to the development of a modern high-powered food processing industry. It is a terrible reflection on Government policy that food imports have increased in value by £21 million in the past year alone. This is an increase of 32 per cent. This increase is illustrated by various examples. A particular example is vegetables. Imports of frozen vegetables have increased from just £200,000 worth in 1970 to over £8 million worth in 1979. In the meantime the vegetable growing acreage in Ireland has dropped from over 10,000 acres in 1974 to 7,000 acres in 1979. The threat is greatest in the area of convenience foods like frozen vegetables. These convenience foods are the ones from which the greatest profits are to be made. The figures for imports illustrate that foreigners are creaming off the most profitable part of the market and leaving our farmers with the low profit sector and, of course, the convenience food market is the one that is going to grow most profitably in the years ahead. The Government should not only face up to the reality of agricultural prices in the immediate future but look at more long term strategies and policies and plans to ensure the proper development of this most important industry.
I have spoken on many occasions over the past 19 years in this House in various debates and, looking back, one of the greatest mistakes we have made in regard to our economic plans, our economic strategy and policy was our failure to realise that this country has immense natural resources, particularly the land and the sea. Our great mistake was in failing to recognise the potential of these natural resources and to formulate and implement the appropriate plans and strategies to ensure that these resources, our agriculture and fishing, are developed to their fullest potential.
In conclusion, I would say that the Government have dismally and unashamedly reneged on their commitment to the farmers in the last election. Fianna Fáil have sold the farmers down the river, they are continuing to do so and it looks like they will continue to do so. I appeal to the Taoiseach and the Government to repent and take immediately the corrective action that the Irish farming organisations are now demanding.
: In this economic debate I can say with absolute fairness that the Government spokesmen have failed dismally to reassure the country. Unemployment has reached a peak higher than that reached at any period during the previous recession of the early seventies, the recession which coincided with the life of the National Coalition administration. Unemployment has increased in real terms from the day the new Taoiseach took up office. That is a strange irony when one takes into account that one of the attributes put forward in support of his becoming Taoiseach was that he had the ability, the capacity, to manage the economy and, in contrast to others unnamed, he had the determination to put things right. Yet unemployment began to increase from the day he took office and will continue throughout the winter and well into next year. What the real figures are is anybody's guess but it would not be an exaggeration to say that they must be somewhere around 150,000.
This is the Government of the managers, the Government of the technicians, the Government of new blood, those who understand technology and how the modern economy should work. It is the first Government of recent times which is attempting the task of administration without giving the slightest indication of even the medium term economic strategy. The Taoiseach has given no indication of any fiscal target he is aiming for. One does not know at the conclusion of this debate what their fiscal borrowing targets are, whether they have any fiscal policy. At the end of this debate one must report that the Opposition and the country are left in total ignorance of their borrowing policy. Since no answer has been offered from the other side, one must ask if the Taoiseach has any fixed borrowing target. There has been no clarification offered by Government spokesmen. It would be over-ambitious to ask what their long term economic strategy is in present unsettled world conditions, but presumably it would be realistic to ask them what they intended borrowing next year or what their target is for this year. Surely an answer could have been given to those questions.
The country is left guessing on the vital matter of the figure the Government consider tolerable for borrowing purposes. That figure now stands—and it is beyond dispute—at 14 per cent of GNP. Does the Taoiseach consider this this figure a satisfactory figure? His speech does not give us any indication of his view on the matter. Nor do the other senior Ministers give their reaction to it. Is this figure excessively high or does the Taoiseach consider that it can be exceeded with safety? Does he intend to exceed this figure? We do not know. The answer must be returned from these benches that we have heard nothing during this debate to give us any indication of what the Government's intentions are in relation to these borrowing figures.
It is little wonder that we can read in the financial pages of one national daily today the headline that the business community gave an overwhelming vote of no confidence to Government economic policy. It is little wonder investors have been selling back to the Government broker so that gilts have dropped by £1.50 because, presumably, they and their very expert advisers are as ignorant as we are here of the future borrowing intentions of this Government—14 per cent of GNP with no indication from any senior Minister what would be their upper limit in the borrowing area. Little wonder then that people are getting rid of their paper moneys as rapidly as they can to the Government broker. Government stocks have continued to tumble on the Dublin Stock Exchange throughout this week as the message of lack of economic direction, the absence of any indication of Government borrowing targets, has gone out to the financial community. The financial community are well able to look after themselves. They can hire the best economic brains in the country to protect the assets of their depositors, and they do. I refer to their reaction to Government indecision only because their reaction, their selling, their lack of confidence, will have a direct impact on employment prospects during the coming year. The major hardship will be felt, as a result of this lack of confidence on the part of the business community, by those who lose their jobs this winter and throughout next year.
Whatever message they may be delivering at the chapel gates in Donegal the national message, as delivered to the important institutions who will decide on jobs, is one of indecision, fumbling, dithering, no direction. That is the message emanating from this Government, this Government of new blood. And blood is an appropriate word when one thinks of the appointments in this Cabinet because blood has been split and will continue to be spilt. I speak metaphorically; I speak of political reputations; I speak of sackings; I speak of sideways promotion; I speak of a divided Cabinet. Of course all of these matters are reflected in the fact that they do not know where they are going. Therefore it is little wonder there is no business confidence, their friends in business have no confidence in this Government. The same friends who financed their victorious campaign three years ago now have no confidence in them. They are beginning to wonder whether the miracle workers know that much about how to operate during a recession.
I recall here during the speeches on the appointment of the Taoiseach—many strong speeches were made during that initial debate—that I confined myself to saying that the Taoiseach's reputation would be judged by the way he managed the economy. I made the point, from memory, that the strongest critique of his performance would be provided by the way he managed the economy. That reputation—the Taoiseach knows it well; he is a man sensitive to the barometer of public opinion—has suffered in recent months as a result of the kind of indecision we have witnessed here during this debate by the absence of any kind of direction from his closest colleagues in the management of the economy
There is no precedent, to my knowledge at any rate, in recent times for such a gross distortion as has occurred between the borrowing target solemnly set forth here by the Minister for Finance earlier this year. In February he said £896 million would be the limit. He said that would be his target for this year. We know now that on present borrowing levels—the figure will be nearer £1,200 million—£300 million out. In the very same speech of February last the same Minister for Finance spoke here very firmly of corrective action being taken. Yet no such corrective action has been taken. A figure of excess spending of £300 million has occurred. Apparently it does not cause a ripple of comment within the benches opposite. It never happened. Indeed, there is almost a new gospel being preached by the people opposite: that one judges the success of a Government by their ability to borrow. It is a strange gospel. Apparently this is what their acumen of managing the economy has become. The more they borrow, the more brilliant they are; as though the day of reckoning could be postponed indefinitely; as though, at the end of this spree—whenever it will end—the taxpayer will not have to pay for their brilliance, their wizardry, in gathering together consortia of foreign lenders from whom to borrow.
No Government spokesman has provided any answer to the question when Government borrowing will be reduced, if ever it will be reduced. We are certain it is not going to be reduced before a certain by-election. I think we can almost be certain that there is no danger of its being reduced before the next general election. Little wonder that business confidence in this Government at present is shattered. Little wonder that redundancies and job losses will continue as a result.
In this major economic debate, heralded as such from this venue and from which the country would hear what would be the direction of future economic policy, Government spokesmen have failed to answer the warning contained in the prestigious and universally respected ESRI Quarterly Bulletin. In that bulletin those economists warned of the serious implications for our economy of the present high level of Government borrowing. The case is now incontrovertible, that the extent of Government borrowing is a contributing factor to the loss in value of the Irish pound. If the Government continue to increase their foreign borrowing then foreign lenders will be led to question the stability of our entire economy. Of course the punt's exchange rate will be impossible to maintain against the other currencies in the EMS. Foreign lenders will become reluctant to lend.
The direction of increasing our indebtedness to foreign financial institutions, which is the policy orientation of the present Government, leads to the likelihood of intervention by international financial institutions in the management of our internal economic affairs sooner rather than later. Nobody can say the precise point at which one becomes so indebted to foreign financial institutions that intervention occurs. The Italians thought they had worked this out to a very fine point indeed. Their economic experts had come to the conclusion that their foreign indebtedness could reach a certain point and there would be no intervention, that Rome and their Government could still be, in the main, in charge of their economic affairs. But the intervention occurred long before the experts had predicted in the Italian situation. They thought they were safe in borrowing up to a certain point with no danger of intervention, and they were wrong. One is not crying wolf, one is not being excessively alarmist, one is only being soberly realistic in saying that borrowing at an annual rate of half a billion pounds, continuing at that level, must lead to foreign intervention at some point, and I say sooner rather than later. In other words, the present Government's borrowing policy is leading inevitably to the possibility of a serious erosion of our sovereignty in dealing with our own internal economic affairs. That is the direction they are taking, having overspent the budget figures by more than £300 million.
I have mentioned the Italian situation, where their experts thought they were safe to a certain point and found they were mistaken. Asking the questions, at what point does the foreign creditor lose confidence or at what stage does he refuse to lend any further, is like asking a man at what point he will break his leg. They are almost unanswerable questions. One would be absolutely correct in saying that the annual £500 million borrowing in which this Government are including is inevitably leading the country into international hock. That is the direction they are taking. When it will happen, God alone knows.
It is interesting to note that the overshoot of our excess borrowing at present as a percentage of our gross national product is equivalent to the total borrowing, as a percentage of their gross national product, of West Germany. This gives an idea of the proportion of our present borrowing. It is also interesting to note that when Britain was borrowing much less than we, the IMF intervened. The lesson in this appears to be that while the Minister for Finance stood up in February, threw out his chest, and promised corrective action, giving stern warnings to all and sundry, the Government have ignored these warnings. They apparently believe that their own fiscal policy is based on week by week political reaction to events, with no coherent follow through, no long-term policy.
We have often enough in this House attacked the so-called manifesto which brought this wonderful collection of Deputies together from all parts of the country in the largest majority ever enjoyed by the present Government. Even that manifesto—excessive though it might have been, wrong though it might have been in its analysis of the economic situation, which succeeded presumably in the objective of returning the Fianna Fáil Party to power—set out the borrowing requirements for the three years up to 1980. Even that manifesto, with all its exaggerated claims, expensive promises, cajoling of different sectors of the electorare, making an offer which could not possibly be refused, despite the potent desire in the Party opposite to remain permanently in power, contained a three-year programme for the electorate. It at least paid that much respect to the electorate's intelligence by saying they would try for the next three years to keep to prescribed borrowing targets. Here in 1980, within a possible two years of a general election, they have no borrowing target whatsoever. No information was given in a major economic debate. £300 million was spent with no explanation or apology. Where is responsibility? What kind of Government have we? The inevitable conclusion is that their own political survival comes before everything else. Nothing else matters. Everything else pales into insignificance—at least as some of them see it, to be deadly accurate, because from speeches on the record there are aspiring Taoisigh within the Cabinet opposite, some of whom would perhaps prefer electoral defeat rather than electoral victory. For the majority, everything else pales into insignificance before the paramount requirement of victory at all costs.
What a contrast such a Government make with, say, the West German Government and I am not speaking of the scale size, as I recognise that the West German Government have the strongest economy in Europe. At a recent meeting of the European Parliament I witnessed a television exchange in the election campaign between Chancellor Schmidt and a very tough TV interviewer. My own German is practically non-existent but a German colleague translated the exchange. The very tough interviewer's line of questioning went as follows—this was on the eve of the West German election: "Chancellor, your policies are bound to be unpopular. You are saying that there is no easy way for West Germany to expect victory. Your opponent is saying that things can be easier. You may lose the election." Chancellor Schmidt's reply was: "What of it if I lose the election? Winning an election means only a footnote in history. The important thing is to do the correct thing, as I see it, for the German economy." Do we gauge the kind of Government we have in contrast with a man who thinks along those lines? What different planets they inhabit. Our Government in the next few weeks in the Donegal election campaign will promise to improve every inlet, harbour, boreen, cottage roof, tarmac roads, repair leaking school roofs and boats which are not seaworthy, make outstanding social welfare payments, and look after every little parish pump. Promises will be made in an effort to do what they consider to be the most important thing in the Irish political vocabulary—win at all costs.
Donegal is only one of our counties, but for the entire country it is an unmitigated tragedy that we have at present such a wildly irresponsible Government in office, copperfastened by their huge majority, free to borrow at any rate they wish at whatever level, and comfortable in their tenure of office by virtue of the oath of loyalty taken by all, however much they may disagree, or see the national interest go down the river. They all stick together in what John Healy has called, with perhaps unintentional irony, their moral community. Moral community. No one will rock the electoral boat too obviously. We have had balm spread during this debate, from the Taoiseach's speech onwards, that there was no problem at all in the country, that there is a wicked international recession stalking abroad, threatening the world economy, but that we are husbanding our resources. That means borrowing abroad. Therefore we can point with pride to the strength of our external reserves financed by foreign borrowing. We go on at £500 million a year selling out what is left of our national sovereignty—this from the official custodians of constitutional republicanism—singing songs of unity to the faithful wherever they gather them in political unity which they know is equally unattainable in present circumstances. I give as an example, the approach adopted to the responsibility of Government by the German leader who believes that any leader worth his salt or who wants to be remembered for responsible action or who wants to go down in history as a serious statesman should do the right thing by his country as circumstances dictate. The German Chancellor can boast that the inflation rate there is non-existent by comparison with ours and that they have a strong economy. The German Chancellor does not think that electoral victory is the main thing. To do the right thing by one's country is not to take the easy options that this Government have been taking.
Unemployment is higher than ever before. If we take into account the differences and definitions introduced into the unemployment categories earlier this year and the seasonal factors, unemployment has reached a higher peak than in any previous recession. There will not be a significant reduction in unemployment in the coming year. What I have said about the economy is based on my concern for the thousands of people who will be at the receiving end of the economic mismanagement of the Government. The people on the job queues, on the dole and on unemployment benefit are the people I feel sorry for. Governments come and go but the men and women who have been unemployed for two or three years are the people we should feel sorry for. We should sense their deprivation and the hardship they endure. These are the casualties of the Government's indecision.
For a change, Opposition spokesmen can come in here without being accused of making partisan statements as we are backed by the opinion of the most reputable economic institutions. In diplomatic language they have been saying much the same thing as even the most strongly condemnatory speeches of Opposition speakers. I will put on record what has been said by some of these people who are professional commentators. When in opposition as spokesman for Social Welfare the present Taoiseach spoke on the Adjounment Debate as reported at column 2313 of the Official Report of 1 July 1976. The Taoiseach's remarks are interesting and they have all the greater relevance to this debate because they were delivered on the eve of a by-election. He said:
To safeguard the economic welfare of the people is one of the primary duties of a Government in a modern democratic State—to provide secure well-paid employment for all those able to work. Not to meet that basic requirement, not to pass that elementary test, is the great central failure of this Government.
That statement did not differ greatly from what Deputy Lynch as Taoiseach said at a conference televised by RTE where he said, obviously not knowing which way the winds were blowing, that if at the date of the next election his Government had an unemployment figure of over 100,000 people they would deserve to be thrown out of office. The present Taoiseach is not so explicit about the figures at which he would deserve to see the end of his term in office. To go back to the text of the present Taoiseach's statement of 1 July, 1976, Deputy Haughey was critical of the economic performance of the Government at that time and he asked rhetorically:
How could the Taoiseach come before this national parliament in a vital adjournment debate and give a reasonably optimistic picture of our prospects, when the most prestigious economic research institute in the country had already formulated a diametrically opposite conclusion about the state of affairs in our economy? I suggest that this must surely give rise to serious and far-reaching concern among those who care about our country, about its management and in particular about the good faith and credibility of its Government.
Deputy Haughey criticised the then Government and based his speech on the ESRI report of the day. Deputy Haughey then went on to say at column 2315:
I want to make it absolutely clear that I believe the Taoiseach and the Minister for Finance gave a certain twist to their economic predictions because of the by-elections.
It is significant that with the advent of the by-elections the world economy, on which so much depends, began to take an upturn and that even in this country the Taoiseach and the Minister for Finance could see visible signs of improvement.
Was it a week or two weeks ago in Mayo that the Taoiseach announced that the recession was over?
: No, it was in Ennis.
: The Taoiseach's peregrinations have become so widespread and he is a man of so many origins, visiting so many factions in his very busy schedule that it is hard to remember. I thought the Taoiseach had announced this in Castlebar. However, some of the Sunday newspapers carried the glad message that as in the words of the old Irish reel, "the winter is all over".
: The Taoiseach did not tell the people in Castlebar, they told him. Deputy Gallagher is in the second benches to prove that.
: The people of Castlebar are entitled to the company of Deputy Gallagher. I take out of it that the Taoiseach two weeks ago saw signs of the ending of the recession. However, in 1976, when in Opposition, his perspective a little distorted perhaps by the position he was placed in then, he was critical of the then Taoiseach and Minister for Finance. He said:
I suggest that that was totally unrealistic and misleading. It was simply false propaganda put out by the Taoiseach and his Minister for Finance and other Coalition speakers in an attempt to influence the outcome of the by-elections.
What fair assessment could be made of the Taoiseach's speech earlier this week? There was no reference to any of the matters I have dealt with and which were referred to frequently during the debate. We have also heard reference during the debate to those important articles by Dr. Walshe and Colm McCarthy in one of our national daily newspapers. Those gentlemen stated that the condition of the public finances was worse than was predicted in the budget speech. They stated that improvement in the trade deficit was slight and may be temporary, while the increase in reserves was less than the increase in official foreign debt. In the first of their articles they stated that the build-up of foreign debt also raised doubts about the púnt's apparently strong showing within the EMS. They stated that when the current account of the balance of payments is deeply in deficit a strong exchange rate performance financed by foreign borrowing was artificial and would not reflect underlying market forces.
When in Opposition in 1976 the Taoiseach took careful note of the ESRI reports and the comments of leading economists, but he has ignored such statements to date. Apparently, they are no longer as prestigious as they were in 1976. There is another by-election pending and, obviously, it is important that it should be won. The economists I referred to went on to state in the course of their articles that the main reason for their concern about Irish public finances was their fear that the current political atmosphere might preclude the kind of action needed to stave off a precipitate financial crunch. We did not get any answer from the Government benches to that doomsday message given by leading economists. Perhaps, they are wrong. Perhaps, they are exaggerating. But surely we are entitled to some reacion to those predictions and statements.
In their second article those economists suggested what in present circumstances would be a drastic remedy. They suggested a reduction in Exchequer borrowing requirement to 10 per cent of GNP in 1981, 6 per cent in 1982 and, ultimately, to 3 or 4 per cent, mentioned by the Minister for Finance as being normal in EEC countries. Drastic consequences would follow from such savage reductions undertaken in that order. Those economists stated that even if we were to achieve that target of reduction of borrowings there was no guarantee that a financial crisis would be averted. They said that even if the very severe action they suggested was undertaken such has been the level of foreign borrowing that it might even still be impossible to avert a serious financial crisis. Those economists admit that the implications of a return to financial balance along the lines they suggested were "painful". They stated that there was no painless way in which a country accustomed to living beyond its means could return to living within them. They believed that the cost of adjustment would be lower if an early start was made than if we drifted into a sudden financial collapse.
Those economists pointed out that there was no mechanism which permitted any Government to borrow indefinitely at recent Irish levels. The Government are spending their way out of unpopularity by borrowing in the taxpayer's name at an unsustainable rate and potentially bartering away our capacity as a country to manage our own economic affairs. There are more ways than military occupation to control a country's destiny. It is not necessary to be as crude as the Soviet invasion of Afghanistan to control a country. If the level of foreign indebtedness gets to the point of no return that the lender does not have any confidence in the collateral offered to him, there are more subtle ways of controlling a country. While the Tricolour may fly over Government Buildings the people in the three-piece suits dictating what happens in the Department of Finance will be those coming from financial institutions who will not give two hoots about what unemployment is caused as a result of their dictation of policy.
Of course, that is the gamble of the Government. The only concern animating the breasts of the new appointees to the second line of the Cabinet, those who will occupy the seats of the first line in the Cabinet in the event of an election victory, is an election victory. Their only concern is the scanning of the calendar for the date which gives them the best chance of a return. The borrowing will continue until that date because that appears to be the message from this debate. The gradual erosion of national sovereignty over our own affairs will continue until that date. It passes over the Taoiseach's head that reputable economists have warned about possible foreign intervention. It is alarmist talk, it is exaggerated because, in the Taoiseach's words, the economy is essentially sound. Listening to the Taoiseach it appears that a new gospel is being preached: one judges the success of a Government by their ability to borrow. In fact, I would not be surprised if at the chapel gates supporters of the Government were not boasting of their prowess with the gnomes of Zurich and those others in control of foreign exchange. It would not be surprising if they were boasting of the cleverness and ability with which they were able to command large sums on foreign exchanges to borrow.
What are the Government borrowing for? It is not for infrastructure, roads, houses, capital investment or the building up of the economy. They are borrowing to keep our current operations going. Economists have already pointed out how much of our current taxation is going to finance our foreign borrowings. The country is going in the direction of Jamaica under the present management. Jamaica, as Members are aware, was unable to take the advice of the IMF and it is presently descending into a state of chaos. The signs of chaos are around us, the roads are unrepaired and there is a gradual growing cynicism throughout the country.
Materialism is rampant everywhere and there is a great doubt cast on the efficacy of this Parliament and what it counts for. Does it matter anymore? Can it influence anything? What is the point of suggesting that people should save or that we should try to expand our jobs base, try to have moderate income expectations if the Government itself gives the lead by borrowing on every foreign market in the world? If the rest of the world would forget our existence and let us go on in this happy way for another 10 years, that would be fine, but that is not the situation. They will not ignore us. Sooner or later some little man in a foreign bank will say that he is no longer interested in backing a Government-inspired loan. Then others will begin to question and then the avalanche will start.
This was mooted by the Government as a major economic debate and it was fair to expect that the Opposition and the country would be told what the Government borrowing plans were, fair to think we might get some targets for them. In the absence of any information of that kind we can only conclude that the present happy-go-lucky policy is to continue at least up to the date of the general election, that the corrective action which the Minister for Finance called for in his budget speech was like many other seeming actions of the Government, only apparent but not real action. One could forgive the Minister. From what one understands he is only to be in the job for a short time longer before someone else is pushed in there. Presumably it will not be his responsibility to bring in the next budget. One could forgive him on personal grounds but there are other grounds on which one could not forgive any man with the title of Minister for Finance for promising corrective action and then ignoring it and allowing the target to be entirely overshot by £300 million. I do not know any example in recent memory of a Government doing this without any explanation.
Articles by economists were worthy enough to be noted by the Taoiseach when in opposition four years ago; their articles were worth poring over; their advice worth acting on but now they are to be ignored because they do not suit the Taoiseach in his present situation. No economist to whom I have spoken in the past three or four weeks, economists of all schools, thinks that there is a painless way out of our present difficulties. The high road that this Government are travelling and bringing us along with them willy-nilly—they are in control—is one of increasing indebtedness, not responsible management. One thinks today of the thousands of men and women who in good faith are agreeing to a national understanding, placing their jobs, their house mortgages and their families' welfare at stake in the belief that the Government will act with equally good faith in managing the economy for the remainder of the year.
Can one blame the people for being cynical when a Government solemnly pledge themselves in a national understanding which their borrowing policy puts in increasing jeopardy week by week? Of course there is a close interaction between the fiscal stand adopted by the Government, its recklessness, and job losses. We are not making here an arcane, obscure point. There is an intimate connection between Government irresponsibility and loss of jobs. But in good faith that national understanding will be signed. In good faith it will be expected that the promises given will be honoured. Their leaders will urge the workers to accept that national understanding solemnly entered into with the Government and the Government continue borrowing knowing well that you cannot continue on that course indefinitely.
The Taoiseach appears determined not to administer any corrective action during this period of office. He is obviously striving to maintain for himself and the Government as much popularity as possible in difficult circumstances, attempting to verbalise away the fact that there is an international recession in the business section of the country, attempting to pretend that cement sales have not dropped, to suggest that there is no crisis in the building industry, that there will be no further redundancies this year. The recession is all over he has said and I have no doubt that the official script for every church gate in Donegal will carry the same lying message—I mean that in parliamentary language—and that in this by-election they will not give the full facts of the economic situation in which the Government have placed the country.
I suggest that political survival is their primary consideration. Nobody loses Government casually; nobody enjoys being beaten in any contest nor do I suggest anybody should, but always in Irish public life up to quite recent times there has been some concern for the country's welfare. I was a member of an administration which was careless in one important matter. We actually fought an election on the basis of giving the electors the economic facts of the situation as well as we knew them. That was a basis of our appeal. We did not have any beautifully wrapped package; we had some home truths to tell the electorate, not many promises. We attempted to tell the electorate that since oil had gone up in price things would never be easy in Ireland again—which is the truth. We were opposed by all the ad-men of this city, with coloured documents, baubles and promises, no price tags attached. It was an advertising experts dream, a marketing job in perfection. There was no problem; nothing has changed; confidence would be restored; we would all buy Irish goods and rates would be abolished. Indeed up to quite recently the Government Minister for Economic Planning and Development, almost like a figure from a Wagnerian opera was saying that it was not his intention to reduce unemployment— he was about to eliminate it. This was said quite seriously by a Government spokesman up to quite recently. Now they are presiding over one of the highest unemployment rates the country has had in the past decade—factories closing in Ministers' constituencies all the time—and the most depressing feature of the entire situation is that the Government are continuing on their reckless course.
The administration to which I belonged made the grevious error of addressing the electorate in 1977 on equal terms. At least it can be said of us that we had respect for our fellow Irish men and women, respect for their intelligence. We treated them as equals in the election campaign. We told them: "Here are the facts". But they were made an offer which they could not resist and they went for it. Some of them regret it. I have no doubt that history will vindicate our approach in 1977 to the electorate, as equally it will condemn the spendthrift policies now being pursued.
In any real sense, this Government are not serving the national interests. Their actions will lengthen the dole queues next year and the year after which will make the painful action predicted by economists much more painful when inevitably it has to be taken. All they are gambling for is a period of five more years of office. By then they may have to administer the medicine themselves, but the important thing is that the glossy brochures will be on the agenda again at the next election. They will be proudly boasting of their ability to borrow, which seems to have become a new virtue of an Irish Government, instead of husbanding our resources.
Elections can be trying things but they can be cleansing things as well. It is time the electorate had an opportunity to intervene in the squalid process of government we have now. We have come to experience a Government who have no centre of gravity whatever, a Government who do not even live up to the targets in their borrowing, a Government who appear reckless even by contrast with the manifesto, a Government borrowing their way out of trouble from week to week and month to month. Half a billion a year is the price of keeping this Government in office—that is what it is costing the taxpayer to finance that borrowing.
I do not know when the election will come. The Government's chief pre-occupation now seems to be scanning the calendar for the most suitable time, but judging by their performance to date it cannot be said that the administration—hopes were entertained that they would show some flair in managing the economy even in difficult circumstances—under the present stewardship will act any more wisely than the one now there with a majority of 20.
When the Taoiseach took over they had two more years to go. When he took over they could have commenced the process of taking corrective action, which is unavoidable at some stage. They have not done so and there is no guarantee that they will ever do it because the disease of maintaining popularity has entered their bloodstream—that is their paramount consideration, and responsibility is out the door. Office is their all-important goal and continuing in office is their only goal. It is high time the country was delivered from that kind of Government.
: That was a good speech by Deputy O'Leary. I sympathise with him in his comparison of standards elsewhere and here. At the outset I should like to point out that it is customary, as a courtesy, that the opening and closing Government speakers are here to listen to the closing Opposition speeches in a major debate like this. I am sorry the Minister for Finance has not been here to listen to Deputy O'Leary's speech and to what I am about to say.
Deputy O'Leary said that the administration of which he and I were members fought the last election on the basis that the electorate should be told the truth, and history will justify that stance in 1977. He quoted the Federal German Chancellor stating on television before the election that even if he lost the election he had done the right thing by his country. I am afraid Deputy O'Leary is naive if he thinks he will get a response from the Government benches to an argument like that. I cannot see any change in the Government's attitude.
There was an example of that here this morning during the announcement of the Order of Business. We all know what Deputy Blaney meant when he stood up and asked the Taoiseach to give an indication of when items Nos. 3 and 4 would be taken—two motions in the name of Deputy Blaney to repeal Acts of which he does not approve because of his political philosophy. Regularly during the past four years Deputy Blaney has been doing that and regularly, from Deputy Cosgrave, as Taoiseach and Deputy Lynch, as Taoiseach, he got a curt "no". On this occasion the Taoiseach asked, "Is it Nos. 3 and 4 on the Order Paper the Deputy is referring to?" That was a disgraceful bit of play-acting on the part of the Taoiseach, just before a by-election, as if it was the dog card at Shelbourne Park he was talking about. It was as if the Taoiseach did not know exactly what was in Deputy Blaney's mind. Then the Taoiseach said: "I will get the Chief Whip to discuss the matter with the Deputy." This is part of the softly, softly approach of the Taoiseach, not to interfere in any way with the prospect of Fianna Fáil getting No. 2 votes from Deputy Blaney's supporters in the by-election this day fortnight.
: Is the Deputy not looking for them?
: Of course we are looking for them. We will take them from Fianna Fáil or anybody else, but we will not in any way compromise principles that our party and this House have stood for for years. This debate was brought about because a fortnight after the Taoiseach made his Ennis speech figures were issued showing the unemployment position far worse than envisaged by any of the commentators. Deputy O'Leary referred to the Taoiseach's Ennis speech in which he said that things were better, that the economy had turned around, that the blinds could be put up and the door opened. One cynic commented that if the door was opened the wolf would run for his life.
For that reason my party decided to put down a vote of no confidence in the Taoiseach, as there deserved to be, since the Government were so out of touch with the reality of the situation. The Government decided to counter this move by putting down a motion of confidence. That is standard play and the normal way of doing things. They would have an opening and closing speaker, and this is considered to be a major coup for Governments. One would have thought that the Taoiseach would have opened the debate with a strong speech defending his position and pointing out that the people should have confidence in him and in the Government. In my ten or 11 years in this House I do not think I have ever listened to a worse opening speech to a debate than the Taoiseach gave. He did not occupy his full time. It was full of goals to be achieved, confidence to be supported, cliches about the rights of young people and the need to see that there are facilities for their education to enable them to take their proper place in the forward march of the country.
The Taoiseach said he wanted this debate to give confidence not just to this House but to the country. The way that message was received was that yesterday the £ had its worst day in the EMS. It has not had as difficult a period in the monetary system as it had then. In my constituency yesterday one valuable firm employing 130 people announced that they would shut down, that is Raybestos-Manhattan. Dunlops, who have done a quality job in Cork for as long as I can remember and who have never been on short time except during the war, have now announced that for the next two months they will be on short time. Another company, part of a group that has had a difficult time, has had to lay off 60 workers and are also going on short time. This is the kind of confidence the Taoiseach got when he sought to send his message to the nation.
The reason for this was because his speech was a transparent deception and based on promises that did not hold water. He said the country's position had improved greatly and gave four instances—lower interest rates, improved balance of payments, strong reserves and a drop in inflation. We have low interest rates because there is not confidence in the economy and money is not being taken up by industrialists investing in factories and industries. That is the reason there is more money available than there is a demand for. Interest rates are dropping not because the economy is thriving but because there is a recession.
The Taoiseach said the balance of payments had improved and that this was proof we had come out of the recession and were doing better than most other European countries. The reason the balance of payments is improving is because of the recession. Our exports are up but this is due to the fact that manufacturers exporting to sterling areas find it easier to sell there now because of the difference in value of the two currencies. I hope this situation lasts. It may not, and there are hints in this morning's papers that sterling may come back in value, in which case it would be hard to sell our exports in the UK and other areas that use sterling as a medium of exchange.
Another reason why it is improving is that we are getting lower prices for cattle this year than last year. That is serious. Deputy Connolly knows better than I do that this is not good for the farming community. It is not good to have a sense of panic in that community that leads to de-stocking. Unless we have a strong herd on which to build the recession in agriculture will last for four or five years. It is very worrying that exports are high at present because of de-stocking of the herd.
Imports are down because we are not bringing in machinery or raw materials for further processing. Our balance of payments situation is improving firstly because our exports are up and part of that is not good for the country—the de-stocking of the cattle herd—and secondly our imports are down. Consumer imports are also down. This is the reason for the improvement, and not because we are moving out of recession or the economy is being properly managed.
The Taoiseach also spoke about the strength of our reserves. Either he is extremely badly advised, does not know what he is talking about or is deliberately trying to fool the House and the country. The reason for the strength of our reserves is because we are borrowing money. One commentator in a newspaper said yesterday that it is like a man who borrows £500 and lodges £250 and points to that and says: "I have money on deposit and my savings are up" just because he has £250 of a borrowed £500 in a deposit account. As I said the Taoiseach does not know what he is talking about or his advisers do not know what they are talking about or he is trying to fool the House, but that is a wrong basis on which to inspire confidence and trust.
The Taoiseach also said that inflation was dropping. We had a drop to 18.8 per cent. This is welcome. As a result of Government policy, 5 per cent or 6 per cent was added to the inflation rate. It was because of the budget introduced last February and other Government policy that the inflation rate was so high this year. The fact that it is coming down is no thanks to any Government action. The Taoiseach said we were doing better than other countries. I shall give a few examples of where that is incorrect. Take the output of manufacturing industry for the second quarter of 1980 over the second quarter of 1979, from March-June 1979 to March-June 1980, in France the output was up by 0.8 per cent; in Germany by 1.4 per cent; in the Netherlands by 0.8 per cent; in Italy by 10.7 per cent; and in Belgium it was down by 0.9 per cent.
The UK was up by 8.6 per cent, and we all know the reason for that. It is deliberate policy on the part of the British Government to try to get their financial situation corrected and their industry has been having enormous difficulties for the last 18 months. In Denmark it was up by 0.8 per cent and in Ireland there was no change. If you exclude the UK, where, as I said there are special problems, every other country in the EEC except Belgium did better than we did.
I will take the rise in the CPI as a measure of inflation, although the figures do not correlate absolutely between one country and another. We will take July-August 1980 over July-August 1979. France increased by 13.6 per cent, Germany by 5.5 per cent, the Netherlands by 7.1 per cent, Italy by 21.6 per cent, Belgium by 6.8 per cent, the UK by 17 per cent, Denmark by 9.9 per cent and Ireland by 18.8 per cent. Therefore only Italy had a higher rate of inflation than we had in that period. Again, that pulls the rug from under the Taoiseach's assertion that we are doing better than any other country.
I do not want to bore the House with a heap of figures but I will take a third example, the growth in exports, which is a strong point. In France the growth in exports in 1980 over 1979 was 18.8 per cent, in Germany 15.4 per cent, the Netherlands 21.7 per cent, Italy 17.8 per cent, Belgium 29.6 per cent, the UK 23.9 per cent, Denmark 26.9 per cent and Ireland 24.2 per cent. Even though we did very well in growth in our exports in the first six months, we are by no means ahead of the field. Belgium, the UK and the Netherlands are all ahead of us in that regard. Obviously in an instance like this one cannot compare like with like because of different rates of inflation in different countries; and these are price increases, not volume increases. To relate them to volume would necessitate doing a sum and the result perhaps would not be completely accurate and I would not stand over it, but it gives some indication. My calculation suggests that over the same period in volume of exports France went up by 4.06 per cent, Germany by 9.4 per cent, the Netherlands by 13.6 per cent, Italy dropped in volume by 3.1 per cent, Belgium went up by 21.7 per cent, the UK by 5.9 per cent, Denmark by 15.5 per cent and Ireland by 4.5 per cent. With the exception of Italy, we are at the bottom of the league again there. Any economist would pull out these figures to show the Taoiseach that the claim he is making on behalf of the country is not correct. While we have done well in exports, our record in the output of manufacturing goods and in inflation has not been good.
Deputy O'Leary devoted quite a lot of comment in his speech to a matter which has been causing considerable worry to commentators, economists and those who watch carefully the movements and underlying trends in an economy. I am referring to the level of borrowing in which everybody recognises in the last few months has been a cause for serious concern. The Taoiseach's warnings about a year ago that this dependence on foreign credit had become dangerous are on record. He issued those warnings at the press conference which he gave when he took over the leadership of Fianna Fáil when, after speaking about the North of Ireland, he said that one of the first things he was going to do was to get the finances of the country into good shape. The unanimous advice of independent commentators suggests that unless the policy he outlined then is followed we face either a foreign exchange crisis or a visit from the IMF. Yet without one shred of serious evidence he has suggested now that a change of circumstances has taken place which means that we should throw overboard the measures he said were essential less than 12 months ago.
The start of this change of attitude was in his Ennis speech and I do not want to rehearse again the implication of this U-turn. The recent performance of the IR£ on foreign exchange markets has been sufficient evidence of what lies ahead if the Government persist in overspending. The Minister for Finance probably is aware that at the moment the three months discount on Irish currency with the Swiss franc is at 2 per cent. The implications of that are quite clear and very worrying.
However, I want to draw attention to two aspects of the Government's management of finances which need emphasis. In the first place the Taoiseach attempted to confuse the issue by saying that the unforeseen increase in Government borrowing was to meet the needs of industry, agriculture and infrastructure. This is not the case. Increased borrowing to meet the needs of industry was done by the ICC and very little of it got to the hard-pressed industry sector. Similarly the ACC went overseas to help bail out the farmers, but none of this money is included in the Exchequer borrowing requirements. The rise in the Exchequer borrowing requirement was not to meet the needs for productive investment but to finance current consumption. In the main it went to meet a rise of 40 per cent in the public sector pay bill and the shortfall of tax revenue below the fairytale figures used by the Government in the budget, in other words it went to meet day-to-day expenses.
There is a case to be made for a reduction in the level of Government borrowing, but that case rests not so much on the size as on the purpose for which the money is being borrowed. For example, there is every justification to raise capital to invest in potentially profitable undertakings such as the telephone system where the intention is that it will make a profit which will pay at least the interest and give a return on the investment. There is no case to be made for imposing a mortgage on everyone's income over the next decade in order to pay for our present day-to-day consumption, and that is precisely what the Government are doing, despite a speech made here on Wednesday, 27 February 1980 by the present Minister for Finance when introducing the budget, as reported at column 712, volume 318, of the Official Report. He said:
I am determined to ensure that the burden on the taxpayer for debts created to pay for current services will not continue to grow indefinitely. We cannot ask the taxpayer of tomorrow to pay for the services we require today. This would be socially unfair and economically irresponsible.
Yet that is what is happening. The bulk of the money being borrowed is not for constructive purposes but to pay for "debts created to pay for current services". In spite of that, if we are to judge by the nods, hints and winks, the Taoiseach is preparing to go further along this very dangerous road in the future.
This borrowing is indicative of one problem, but the real problem is the level of the current budget deficit. The country needs immediately a clear statement from the Government that the elimination of this deficit is a primary goal of their economic policy. To lend credibility to this they must put forward a realistic programme of fiscal reform designed to achieve this end. There are several options open to them. None of them is painless but some perhaps are less painful than others. Over the last 18 months the wage bill for the public sector grew by over 50 per cent and it now absorbs 56 per cent of tax revenue.
For every pound raised in tax 56p goes to pay the public sector wage bill. The cost of servicing the Government's debt takes up a further 25p or 26p, or, 25 per cent of the tax revenue. That means 81p out of every pound raised in tax goes to meet the public sector wage bill and to service our debts. That leaves 19p in every pound to represent the value of the services supplied to taxpayers by the Government. If most taxpayers realised the position, there would be a revolution and the people would be back on the streets.
Since January it was in this last area alone that the Taoiseach attempted to economise. The result has been that the taxpayer has been asked to pay more while getting less. Instead the Government should concentrate on the other two components of public spending—the cost of the public sector and servicing the debt. At a time of negligible growth of real national income the public wage bill has risen at an intolerable rate and the burden of financing it has fallen on reduced services, increased taxes or borrowing. This must be reversed.
The Government ought to reduce the rate of growth in the public sector and relate the public sector wage bill to the real rate of growth of gross national product. In so doing they will automatically reduce the rate of growth of the burden of debt interest. If the Government fail to get the nation's finances straightened out, the grim prospect is an unavoidable depreciation of the Irish pound in the EMS and an eventual form of devaluation. That is likely to be the first, but many devaluations may follow. Such an outcome to the present financial crisis will not bring any solution to the problems facing us. Instead, it will simply result in a rapid acceleration of inflation as we undergo wage price spirals caused by the impact of devaluation on the cost of living.
It is frequently argued that devaluation, because it assists exports, is a solution to problems in countries in similar situations. This may provide a temporary short-term solution but the end result is far more damaging because in an open economy like ours where so much of our GNP is imports, we would be importing a rate of inflation which would work its way into our economy. A fall in the exchange rate whatever ephemeral effects it may offer, will not provide one permanent job in industry. Wage costs will inevitably reflect the performance of the Irish pound and its effects on the consumer price index. All we shall have achieved is faster inflation which will prove even more costly to wind down.
It was suggested recently that farmers would gain from devaluation. This is a delusion. A fall in the exchange rate will raise the cost of farm imports by as much as that of farm output. Farm incomes in real terms will not be affected. After three or six months whatever advantage one gets from devaluation will be wiped out by the inflation which has been imported.
There is no solution to our problem to abandon the exchange rate. Instead, we shall simply have to add to the burden of inflation on those with low or fixed incomes. Whatever else happens, no matter what it costs in taxation, the Government should, and Fine Gael would support them, commit themselves to maintaining the real value of pensions and social welfare payments. People most exposed to inflation should know that the Government will protect them from its worst effects. I do not think that will happen, but I would like a commitment from the Government that, if necessary, they will take these steps.
As I said, it has been suggested that devaluation of the pound, outside the value of the Green £, would be of assistance to the farmers but I do not think it would, for the reasons I have already given. I am aware that our farmers feel dramatic action should be taken to support them in what is proving to be the worst year in the history of farming. I spoke to many people in the farming industry and they said that farming is at a more depressed level in 1980 than at any time since the mid-thirties and the economic war.
The Government obviously recognised that because they met the farmers about a month ago and offered them puny aids which were discarded by the farmers as not being nearly adequate to meet the problems facing them. They met again last Friday. I do not know if this is true but on Saturday morning The Cork Examiner and The Irish Press reported that when members of the farming delegation met the Taoiseach, the Minister for Finance and the Minister for Agriculture, they were told that unless they were good boys and did not march between now and the by-election no further aids would be offered to them. This was denied by the Minister for Agriculture——
: It is absolutely, totally and utterly unfounded. I was more surprised than the Deputy when I read it. I was there. I do not know what the source could be, but there is no basis for it.
: Only two papers had it and they must have misunderstood what the farming delegation said. I am glad to hear there was no truth in it because I would not like to think the Government were adopting an intimidatory attitude to one of our principal organisations.
: I agree. It would be entirely inappropriate.
: I want to refer to the aids offered to the farming community. On the payment of rates the Minister said the Government were arranging that the local authorities would adopt and understanding attitude towards individual farmers who clearly had temporary difficulty in meeting their rates liability. That is very nice, but what does "an understanding attitude" mean? My understanding is that for the last three weeks six-day notices have been flying like confetti off a fan all around the country and anybody whose rates were overdue received a demand to pay them forthwith. The local authorities must send out these six-day notices. The Government cannot say a local authority would adopt an understanding attitude about rates because it is the duty of the council to collect the rates before a certain date. They must ensure the money is paid.
Perhaps the Government agreed last Friday to waive the second moiety of the rates on farmers between £40 and £60 valuation, who were dragged into the rate net last year, despite being told by this side of the House that that was a pointless exercise, that it was something farmers could not afford to pay at a time when they were experiencing the worst recession of the past 45 to 50 years. Yet the Government insisted on putting through a measure which brought into the rates net farmers within the band I have mentioned. However, the Government had to climb down. There has not been any indication as to how they propose to relieve these farmers. Is it the intention that the Government will pay to the local authorities the amount that is to be lost by way of the waiving of this second moiety of the rates? Is there to be legislation introduced to repeal the existing situation? It is a fine public relations exercise to say that all farmers in the £40 to £60 valuation net are being relieved of the second rates moiety, but so far as the law is concerned these farmers must pay these rates unless someone else pays them for them. In these circumstances the Minister for Finance should tell us here today how precisely the Government intend dealing with this matter.
Apart from the category of people in question, there are many other people, other farmers, for instance, who owe rates. Are these people to be treated also with an understanding attitude by the local authorities? Will the adoption of an understanding attitude mean that the county manager will be able to say that certain individuals are to be dealt with in an understanding way? In other words, is the adoption of an understanding attitude to be on an individual basis or will it be the case that a county manager may say to the Government that since he cannot collect rates from certain individuals, he wishes the Government to reimburse him for the loss concerned?
I am very pleased that something tangible is being done for the farmers, but I am concerned about some other groups of people, for instance, hoteliers and guesthouse owners around the coast who have had a disastrous season in terms of tourism and who are finding it extremely difficult to pay their rates. There is the question also of small business people who, because of reductions in sales and in revenue from tourism, not to mention high inflation, are experiencing much difficulty. Are all of these people to be treated with an understanding attitude? If this understanding attitude is to be adopted in relation to some farmers, there is every reason for it being adopted also in respect of small businesses whether these be factories or any other businesses. One need only read the newspapers any day to realise the difficulties being experienced by industry. In my constituency alone one factory closed yesterday while two others went on short-time production. It would be of much help to one of the latter and, I think, to the other also to be relieved of their second rates moiety. Rates are an enormous burden on firms who are experiencing severe cash flow problems as a result of inflation and because of the difficulties being experienced in trying to remain competitive in the export market.
Therefore, I trust the Minister will ensure that the understanding attitude being adopted will not be confined merely to farmers who find themselves in difficulty this year but that it will apply to anybody, particularly anybody in the tourist industry, in respect of which much of the recession is due to the Government, who is in difficulty.
I have spoken to shopkeepers in the west and they have told me of the very bad season they have had, of having enormous stocks remaining on their shelves, stocks which were ordered in the winter and delivered in springtime and which must now be paid for. Because of the bad tourist season these stocks remain unsold. In some cases the shopkeepers have been forced to cut prices in an effort to sell some of the goods and now they are being pressed by local authorities for the second moiety of their rates. That is the duty of local authorities, but the case I am making is that the same consideration should be given to these other categories of people as is to be given to certain categories of farmers. The Minister must let us know how he plans to reimburse local authorities for any losses incurred as a result of the waiving of rates.
The Government must ensure that the very high unemployment level is not worsened. The unemployment figure is likely to be as high as 130,000 by the end of the year, but to use the same basis of calculation as Deputy O'Donoghue used in 1977, the real figure is likely to be between 160,000 and 170,000 people seeking work by the end of the year, the highest ever figure in our history. This is the situation we are in with a Government who were returned to office on, among others, a promise to cure our unemployment ills by 1985. There is not any point in going back over that ground, but the Minister might tell us if there has been a complete change of mind in relation to the various Green Papers and White Papers that we were told would be very much part of this administration. Apart from the rather washy document that was published during the first week of this year, I do not recall any other policy document since Fianna Fáil's return to office.
: I take it that the Deputy is concerned about content and planning to a greater extent than he is concerned about the colour of documents, but I shall be dealing with this area during my contribution.
: The Minister is aware that there is some significance in the colour of the jacket on any document. Are we to take it that this whole exercise of publishing policy documents has been abandoned?
: Far from it.
: Deputy O'Donoghue promised that the Government would produce discussion documents each summer and that decisions on the various proposals involved would be taken and published in the form of White Papers during the winter. That idea seems to have been abandoned.
: After the Deputy has heard from me, he will be aware of what is being done. He will know that what is being done is both appropriate and effective.
: As Deputy FitzGerald pointed out on Tuesday, the only change in the unemployment situation this year is that there has been a loss of 25,000 jobs. This has happened under a Government who promised so much in this area. Any growth in employment has been in the public sector. This is a catch 22 situation in that taxation is being raised to cope with the growth in the public sector at the expense of the private sector who, because they are being deprived of this money cannot create long term productive jobs, which should be the objective of every Government in the country and would certainly be ours. We put forward suggestions as to how the employment situation could be improved. One of those suggestions in the document we launched on Monday would give an immediate boost to the country. Anybody who deals with these matters, as the Ceann Comhairle used to before he took up his present office, and as the Minister for Finance and I know, knows that the effort to put together the deposit on a house is for most young married couples beyond their ability. We are now talking about a loan of £11,000 or £12,000 and a deposit of £6,000, £7,000 or £8,000. It is not possible for those young couples to put that together. This means that the demand for houses is falling and employment in the construction industry is also falling. This can be seen clearly in the dramatic fall in the level of cement sales this year.
I believe that our suggestion is a very constructive one which is feasible. We have had it costed and I am sure the Minister is doing the same this week. It would be certainly welcomed by the construction industry and would give an immediate boost to that industry. I have spoken to two builders in Cork in the last month, one of whom has not sold a house since September 1979 and the other has only sold one house since March this year. We can imagine the type of Christmas the employees of those two firms are facing. Both those men constantly have had to shed labour during the past two years. As they moved off the site and the houses became completed and occupied, they had to shed their labour force. There are a number of reasons for this, but the prime reason is that the difference between the amount of money available to people to buy houses and the cost of the houses is too high to be met by young couples even if both of them are working.
Our suggestion is that instead of allowing the couple to raise a mortgage and pay it off at a fixed amount over 25 or 30 years, the amount of money they will pay for the house should be greater and it should be paid off as a percentage of their income. This is a style of mortgage which will not suit everybody. Obviously if people have the deposit for a house they would be better to go for the existing type of mortgage under the SDA or the building society loans. The people who have not got deposits for houses and who are willing to undertake giving a fixed percentage of ther incomes, whether it is 18 per cent, 20 per cent or 25 per cent for the rest of their lives—as their incomes go up the repayments for the houses go up as well—would be suited by such an arrangement.
I believe there is a very ready market for this. There is a pool of money to finance this scheme, such as pensions fund money. In our scheme we would redirect that, inflation proof and with a profit on top of it, into a housing agency. This fund of money can be quickly obtained. I believe if it was launched with enthusiasm by the Government within the next week or month 2,000 houses could be built in this year alone. This would have a very beneficial effect on the construction industry, which is one of the worst hit.
I would like to refer particularly to the closing of the Raybestos factory in Cork. Most Deputies in the House will understand that this had a rather unhappy history because of the dumping of the waste from this factory which caused a considerable problem in Cork. The responsibility for getting rid of that waste has rested with Cork County Council. There are a number of other factories producing toxic waste and the disposal of that waste has been a problem either for the collector from those factories or for the county council in the area.
The immediate problem of the disposal of the toxic waste from the Raybestos factory has gone. It is time for the Government to establish one national dump for toxic waste. It should not be the responsibility of county councils. As an officer in one of the county councils admitted the other day, they had not got the staff to monitor the dumping of the waste, they had not got the funds to purchase the land or to isolate an area for that waste, if it became necessary. I agree with the comment of one person that we should not talk about a dump in that regard but about a storage area or something like that, because a dump raises all sorts of implications for people living in the particular area. The Government and the Minister for the Environment should investigate the whole country with a view to establishing a place which would be suitable and acceptable and would be financed by the Government for the disposal of toxic waste. If we are to achieve the level of employment which we all want in the country that is something which must be tackled immediately.
Many of the jobs in those factories are high quality jobs. The people employed there are well paid. In some instances it is clean work but the disposal of the toxic waste is a problem. We cannot any longer presume that for the sake of jobs people will accept what they consider to be a dirty industry. The Government should undertake to establish a national storage area for the sake of allowing jobs to be created in the country, and also remove the situation which obtained during the summer where toxic waste was being illegally dumped into rivers and streams throughout the country because there was nowhere for the collectors of that waste to dispose of it.
I understand that the Minister for Energy does not want to make any decisions which are unpopular—no Minister likes to do that—but he should not keep stringing along people like the Dublin Gas Company in the hope that their problems will be solved because he will give them natural gas. The Dublin Gas Company ran for years on a substance called naphtha. Because of the breakdown of individual oil refineries throughout the world a large surplus of naphtha came on the market in the late sixties. The cracking of a barrel of oil was determined by individual refineries and the demands for the various products of a barrel of crude oil at the time left a surplus of naphtha on the world market. The Dublin Gas Company at that time contracted to purchase this on a long-term contract at a very reasonable price. This position obtained until the contract was broken as a result of the rise in the price of oil in the seventies when naphtha became very scarce and extremely dear. It is now costing about £140 to £150 a ton. Naphtha 15 to 20 years ago was very cheap and plentiful. It is because it is scarce and dear that the Dublin Gas Company want to tie into the natural gas supply in Cork.
The Minister has not said, and he should make it quite clear because there are implications for other firms who are taking natural gas, that in the eventuality of the pipeline being built, it will be in the form of a hidden subsidy to the gas company if it costs £120 million to build it. If one takes an interest rate of 14 per cent, that is about £15 million or £17 million, the cost of servicing the amount of money that would have to be borrowed to pay for that natural gas link. That, in effect, would be a subsidy to the Dublin Gas Company.
I do not know what their present subsidy is but it would be an additional one. When I asked the Minister about this before, he gave a flippant answer saying I could be quite certain that nothing would be done in Dublin that was not done in Cork. If the Minister intends selling natural gas to the Dublin Gas Company at the equivalent oil price, not at the price An Bord Gáis are buying it from Marathon, but the equivalent oil price, then there is no advantage to the Dublin Gas Company in financial terms over buying naphtha at the moment. He in only joking if he is leading them along that line. If, on the other hand, he intends to give it at a reduced price, the price for which An Bord Gáis are buying the gas from Marathon, then he should not have allowed An Bord Gáis to enter negotiations with the Cork Gas Company on the basis he was going to charge them an equivalent oil price; he must treat one exactly like the other and the Dublin Gas Company's financial problems should be treated totally separately, whether or not they get natural gas. The natural gas cannot be used as a subsidy for the Dublin Gas Company, nor can the laying of a pipeline from Cork to Dublin be the only possibility if Dublin Gas Company are the only customers.
You could not justify spending £120 million on such a pipeline remembering that the gas field in the Celtic Sea off Kinsale is relatively small. If it proves to be bigger or if there is a gas field found off the Porcupine Bank or off the Kish Bank that would boost the supply of natural gas by a factor of five or six or ten, then the building of a pipeline, a grid for natural gas, might be justified but to build the pipeline purely to take sufficient gas from the existing natural gas supply and pipe it to Dublin is economic nonsense. However determined the Minister for Energy is to remain popular inside Dublin he should not be sending the Dublin Gas Company on a fool's errand in this regard. He should treat their financial problems completely separately. Deputy Moore knows what I am talking about. Their financial problems are different and have nothing to do with whether or not natural gas should be piped to Dublin. I understand that the Minister would not like to make an unpopular statement but that is a fact. If the Dublin Gas Company are in trouble financially they should be rescued by An Fóir Teoranta or by the Minister for Finance. If the Minister for Energy wants to keep them in business because they provide an extremely valuable source of energy to the poorer sections in Dublin, there is a very good case to be made on social grounds for keeping the Dublin Gas Company in business, but not at the expense of the general taxpayer in piping gas from Cork to Dublin at a cost of £120 million.
I wanted to say something about tourism but I am running out of time. The Government have seriously damaged the confidence of the tourist industry and tourism prospects both last year and this year. I do not want to go over it, most people will know what I mean: there was the postal dispute, the petrol debacle and the murder of Earl Mountbatten. I am sorry, I should not say the Government were responsible for that but it was one of the things that damaged the tourist industry. The Government, recognising the damage that had been done to the tourist industry last year should have turned around this year and seen to it that they backed it. Instead of that they introduced a budget which further damaged it. Because of the increased cost of 20 per cent in petrol and spirit prices they further damaged the tourist industry and appear to be doing nothing now to ensure that no more damage will be done next year. You must plan your tourist season eight, ten, or 12 months in advance. There is no indication that the Government are going to do that.
In relation to the Government, the Israelis used to pick out one member of their tribe and they would load all the sins of the tribe on to that member and send him out to the desert to do penance for the whole tribe. Last year the Fianna Fáil Party picked Deputy O'Donoghue as being the scapegoat and the penancedoer and they sent him to the desert with the backbenchers. This year, the Minister for Finance is going to go to the far more rarefied desert of Brussels but next year I hope that the Taoiseach, his Government and his backbenchers will all come to the desert of the Opposition benches and do penance for mismanaging the economy over the last three-and-a-half years.
: During the course of the vacation period the Opposition Deputies were individually very vocal, if not collectively very consistent. It is evident that arising out of this tendency to be individually vocal during that period, they felt that to be collectively consistent, for once to speak with one voice, they should put down motions of the kind they did. The Government are ready to deal with them on that basis. I will, in the course of my reply, deal with some of the inherent, not just apparent, inconsistencies in what we have been asked to do by the Opposition in this motion and the inconsistencies between what they have been asking us to do individually and what they are calling for collectively. Before I come to that, I would like to say, with reference to a number of the points Deputy Barry made at the conclusion of his contribution that, frankly, I thought for a while that it was the Tánaiste who was sitting here. Perhaps Deputy Barry is so accustomed to seeing the Tánaiste in this seat for debates, he assumed he was here. It would be more appropriate to relate those issues and arguments to the person immediately responsible, particularly with what we are concerned here, and Deputy Barry is spokesman for Finance. I would have expected from Deputy Barry, or the spokesman from the Labour Party, an analysis of the economic condition and if it appeared to them to be apparent, a forthright attack on policies, but Deputy Barry in the last part of his contribution has been talking about the gas line to Dublin and the situation in Cork which, incidentally, is also the responsibility of another Minister, both of whom are dealing very effectively within their own portfolios with their responsibilities.
: I am not making any apology for my contribution here.
: I appreciate that. I will pass on the Deputy's concern. With regard to Cork I anticipated that Deputy Barry might raise this.
: Is the Minister going to give us a lecture on it?
: I have been given figures which I know Deputy Barry will find reassuring and which I will convey to him and then I will deal with my responsibility. In the first half of this year the IDA concluded negotiations with industrialists in the Cork region who plan to invest over £20 million in almost 90 projects in Cork with a potential of 1,800 new jobs. In the five-year period of the industrial plan up to 1982 they set a target of 5,800 new jobs and they are more than on schedule to reach the target. In regard to some of the recent projects for the Cork area of which the Deputy will be aware, Nashua will employ 600 people, Apple Computer Corporation will employ 724 people and Lois projects will provide 600 jobs. It is fairly evident from that and from other details that will emerge and will be announced later that, whatever about the developments in an individual plant for whatever reasons, the employment projects in the Cork region, as elsewhere, are very much ahead of target.
Turning to what is my responsibility, the impression has been conveyed by the Opposition before and during this debate that suddenly the problems—and there are problems; let us recognise that—have emerged because of mismanagement on the part of this Government, that suddenly what is happening here happens here only, and nowhere else. The problems internationally which we have had to face have been evident from the beginning of this year and throughout the second part of last year. I made it very clear, at the start of this year that, because of the general international recession, it would be a very difficult year for us. What at that time appeared to be sombre forecasts and indicators turned out, in the event, to be optimistic in respect of the international economic situation.
For example, in December last the OECD expected that the GNP of the OECD area generally, which is all the developed world, as Deputy Barry knows, would grow in the first and second half of the year. By July of this year, this view had changed to one on which the GNP was forecast to fall in the second six months of the year. The December forecasts in relation to inflation in the OECD area this year and also in the balance of payments deficits generally for the OECD area and the EEC generally were all revised substantially upwards by July. When I said in my budget speech that this would be a difficult year, I was speaking in the context of international opinion as it was then. The reality, as Deputy Barry and everyone else knows, is that the same forecasters at international level have recognised that things have taken a downward trend since then.
If I recognised difficulty at the beginning of the year, I must certainly be prepared to recognise the difficulties at this stage of the year, having regard to the downward trends which occurred in the meantime. If people want to imply that all the difficulties derive solely and exclusively from mismanagement on the part of this Government, they can endeavour to imply it, but we all have an obligation to be credible not only from the point of view of stimulating each other but also if we intend to offer to the electorate, whenever the occasion arises, a realistic alternative.
: Hear, hear.
: We have seen the pattern of downward revision of the forecasts for growth and substantial upward revision of the forecasts for inflation and balance of payments deficits. Let me take this point on inflation in case it might not occur to me later on. Since the beginning of the year there has been a revision upwards of the international inflationary trend. The confident forecast of Deputy FitzGerald, who implied that he was wearing an objective economist's hat during the course of the Budget debate, that by this time our rate if inflation would have gone over 20 per cent, like so many of his other forecasts, has not proved realistic, despite the fact that the international inflationary tendency is much more severe now than it was when he made his forecast almost nine months ago. I want to put it on record that currently it is something of the order of 18¼ per cent, and we expect it will be maintained at that level by the end of the year and certainly not above it. That is running contrary to the increasing trend of the inflation graph internationally and disproves quite categorically Deputy FitzGerald's and Deputy Cluskey's confident predictions in the budget debate.
: It went over 20 per cent.
: They said it would be well over it very shortly. They said that at the end of the year it would be well over 20 per cent.
: I do not think they said it would go over 20 per cent.
: It is fair to say that developments internationally have been more difficult than even the best equipped international forecasters were able to predict at the beginning of the year.
I said this in my budget speech, and I want to remind the House of it. Inevitably in this energy dependent open economy—and I will not go into the details of what that involves—we have been affected by this significant downturn. That is a reality. The Government and I are concerned to demonstrate very clearly how we have coped with that unwelcome development over the past nine months in particular, and how we intend to continue to cope with it in an effective, coherent and positive way.
The choice facing me at budget time was on the form of economic policy we should follow given the major changes in the international economy brought about by the second oil crisis. What were the options? One would have been to forget about growth and employment creation and to concentrate solely on reducing the balance of payments deficit and the Exchequer borrowing requirement. It is fairly evident that, in this development stage of our economy, and particularly having regard to the demographic structure of our people and the number of our young people who are coming on the labour market with skills, with education and confidence, that option would not be acceptable here.
I make no comment on policies being pursued in other countries beyond saying that what might appear to be consistent policies for another country such as those being pursued at the moment by the British Government could not and would not be acceptable here having regard to the level of unemployment, if nothing else, which we may have inherited and, over and above that, the growing population to whom we have to offer opportunities. For that reason understandably the Government and I did not set out on that path.
The other course would have been to continue to aim for high growth, irrespective of the changed international condition which, as I said, has been deteriorating unfortunately even since that point. This would have involved an unacceptably high balance of payments deficit, aggravating the Exchequer borrowing requirement further. It is fairly evident that that would not be acceptable to the Minister for Finance and the Government, having regard to the obligation we have to manage the public finances and to make the appropriate adjustments in the light of the developing economic conditions internationally and at home.
The strategy we decided on was a balance between these two extremes. We modified our plans to take account of the changed international circumstances while, at the same time, strengthening in every way possible the sources of growth and employment in out economy. The budget emphasised the need to reduce the level of Exchequer borrowing, notably—and if the Deputy reads my speech he will see this—because of the close connection between it and the size of the balance of payments deficit. I made it clear at that time that I rejected any call for a crash programme to reduce Exchequer borrowing quickly, or to remedy the balance of payments difficulties in one move. I said that when things were better internationally than they are now.
I said then—and I hope it has been seen to be so in retrospect—that it was a pragmatic, sensible and flexible approach which rejected on the one hand the dogmatism of growth regardless of the consequences and, on the other hand, the even less attractive dogmatism that sees economic policy solely in terms of the borrowing requirement and the balance of payments deficit, important though they are, and let me stress that.
The central question on economic policy we faced then was whether the shock of the oil price increase should be aggravated further by a deflationary budgetary stance, or to take the view, which is the view I took, that the economy needed time to adjust to the massive increases in oil prices. It is fair to say that the Opposition contribution to the debate so far has not faced up squarely to that central question. That question obviously is as relevant today as it was at budget time. I will deal with that in further detail later.
Throughout the year my objective and that of the Government has been to contain the balance of payments deficit in the face of continuing growth in the oil import Bill. As the Taoiseach said—and sometimes one wonders if it should be necessary to re-state the obvious here—our oil bill this year will be about £250 million higher than it was last year. The increase is higher than the total we witnessed even three or four years ago. That has a crushing effect on any economy. Clearly, therefore, to cope with that within the balance of payments, a major improvement in the non-oil balance of trade is required if the balance of payments deficit is even to be stabilised at last year's level of £730 million. The experience so far this year demonstrates clearly that the trade deficit in the first nine months of the year was lower by more than £130 million on last year's level despite in increase of nearly £190 million in the oil bill. I would expect for that reason that the balance of payments deficit for the year as a whole will be £100 million less than last year, even taking into account an increase of about £250 million the oil bill.
I am not making a virtue of a balance of payments correction because there are other factors but it is a welcome and significant trend. Government policy as reflected in that trend, allied to a sensible and not over-restrictive monetary policy, is proving to be successful. Our experience is markedly different from that of many of our European partners and of the developed economies generally. Most oil-importing countries—and many of them are not as dependent as Ireland on imported oil—have far worse balance of payments problems this year than last. For the EEC as a whole, this year the deficit is expected to be two-and-three-quarters times the 1979 level. That is the reality. The latest EEC figures indicate that apart from Ireland the UK is the only other Community state that has a substantially improving trade balance. I do not think the House needs to be reminded of the fact that in the case of the United Kingdom oil production has to be taken into account.
I do not recall that fact being referred to by any spokesman from the Opposition and I have had reports on everything that was said in this debate. If they want to present themselves as taking an objective appraisal of the situation. I should have thought that fact would have merited even a passing comment. However, it did not surface at any point in their contributions.
In my budget statement I recognised—as I recognise now—that the borrowing requirement is a major constraint on the Government's room for manoeuvre. It is a constraint but it should not be seen as the be-all and end-all of economic policy and I will explain the reason. Perhaps for want of an alternative stick. Opposition speakers have been raising the borrowing requirement to the status almost of a central, if not the most important, objective of economic policy. I said in my budget speech, and I repeat it now, that a reduction in borrowing is required in the short-term in order to help to reduce the balance of payments deficit to a sustainable size. As I said, the balance of payments deficit is being reduced. Therefore, if we are honest this should give us a sense of proportion when discussing the borrowing requirement.
Some Deputies opposite have been saying that the State has almost run into a crisis in public finances unprecedented in modern times. Apart from the fact that this is not the case and while my responsibility is with the present and the future. I must refer to the past. Those people must have very short memories if they can make that statement. Exchequer borrowing requirement this year will not reach, yet alone go above, the level reached during the first oil crisis.
In 1975, the Coalition Government of which Deputies FitzGerald and Barry were members and in which Deputy Cluskey was a Parliamentary Secretary, had a borrowing requirement that exceeded 16 per cent of GNP. That is substantially higher than anything we experienced last year or will experience this year. Incidentally, I note their rather belated conversion to concern regarding growth in the borrowing requirement despite their own performance in government. Contrary to what some people may suggest. I am confident that, allowing for the extra demand we have faced on current services particularly on the pay side since the budget and also taking account of the deliberate decisions of the Government for investment projects that we implemented during the year and which we will implement in the remainder of this year and during next year, the borrowing requirement will not reach the order it reached last year. That is despite the serious international developments that have occurred since the beginning of the year when we set certain targets.
When the borrowing requirement was 16 per cent of GNP in the time of the Coalition Government, we criticised the performance of the Government but we did not single out any one element as if that were the only thing about which we were concerned. We did not just play politics with one norm among all the other norms. We cannot be accused of creating the misleading and perhaps even nationally damaging headlines that appeared in yesterday's London Times.
In that paper there was an article entitled "Economy of Ireland in Critical Condition" and there was also the following sub-title, "Spectre of Appeal to IMF Raised". The paper quoted Deputy FitzGerald as saying in the course of the debate here that the Government "might have to go to its knees"—his words—"to the IMF with all that that would entail in the form of deflationary policies and a further massive rise in unemployment".
If the leader of Fine Gael decides that he should state his prognosis of gloom and doom in such stark terms, it is not surprising that a paper as significant as The Times should at least repeat what he said. He went on to talk of the “inevitable question” we will have to face of consulting the IMF. His suggestion that we might be on our knees and that consultation with the IMF was inevitable invited such comment from The Times and, of course, that is damaging to the national interest. I deplore the misrepresentation that Deputy FitzGerald engaged in in that context. Even though he was making comment on an economic comment—that is fair enough—he did so in a way that he could hide behind that comment while using words such as “inevitable” and “on our knees” and this allowed The Times to put their interpretation on it.
It is obvious the Opposition want to convey an impression of gloom and doom for their own political purposes. That is a matter for their judgment but I believe our own people will draw their own conclusions. It is simply untrue and grossly misleading to talk of a crisis as Deputy FitzGerald has done in connection with the State's foreign borrowing. Foreign borrowing is not just a characteristic of Ireland today. I have mentioned what happened in 1975-76. It is a known avenue for dealing with balance of payments deficits in order to avoid sudden adjustments that otherwise would be unacceptable and extremely painful in terms of growth and employment. It is accepted by the most reputable international opinion that it is quite in order. I am not saying it is a panacea one looks to when one is not prepared to discipline oneself. Provided a country is prepared to effect a balance across the management of public finances, and particularly countries affected by massive rises in oil prices, it is acceptable that a country would borrow to cover its balance of payments deficit.
The big international issue at present is that of recycling the OPEC surplus. I am not aware that anyone else has raised this matter in the House but this was the major issue which surfaced at the IMF meeting I attended. The only time I can imagine any Minister for Finance in a Fianna Fáil Government having any dealings with the IMF will be at the annual meetings which we always diligently attend. Even the EEC countries feel the need to have available to the Community, individually and collectively, a facility for recycling. As recently as last Monday at our meeting in Luxemburg the finance ministers of the Community approved a report from the monetary committee which envisages that the EEC will organise a new instrument under which approximately £4.5 billion will be made available in loans to assist member states whose balance of payments deficits are directly or indirectly caused by higher oil import bills. Even Germany is now engaging in foreign borrowing as part of her adjustment to higher oil prices.
I have tried to give an impression of the balance we are maintaining but it must be said that the increase in unemployment is disturbing and the Government are doing everything possible to cope with it. I have heard the speeches made in the House and some rather selective quotes from outside the House, but how many people realise that in recent times the rise in unemployment in other member states, such as the United Kingdom, Denmark and the Netherlands, has been proportionately greater than in Ireland? That was not the situation between 1974 and 1976.
: It was.
: I thought this was res judicta. If I had thought the question would be raised I would have brought the proof before the House. I will do so.
: Do.
: We were at the bottom of every table. Although it is no great consolation to us. Commissioner Burke recently reminded us that Belgium has now in absolute terms a higher rate of unemployment. I do not think that was ever the case in 1975-76. Are we being criticised for improving or are we expected to take ourselves out of the reality of the international scene at a time when that reality is even more acute than at the time of the first oil price hike? These countries are all more developed than we are and it cannot be implied that we have not adopted appropriate and effective policies. It is clearly demonstrable that our policies have maintained the balance in such a way as to ensure that we do not suffer more acutely.
Deputy Cluskey stated that we are not committed to the objective of full employment. The fact that this is our objective has been reiterated and effectively demonstrated and it is clearly stated on the first page of the national understanding where the Government affirm their commitment to the earliest possible achievement of full employment. Deputy Cluskey might take issue with me as to when it will be achieved but I take issue with him on his statement that we are no longer committed to this objective. I refute that allegation and we are demonstrating our commitment.
When speaking in response to my budget statement, Deputy Cluskey said that it was not my statement but the Taoiseach's, although of course it was my statement made on behalf of the Government. He also said that my budget statement demonstrated that the Taoiseach had set himself on a path of confrontation with the unions, that he was obviously sharpening his knives for a confrontation with the unions. I wonder how that statement appears to Deputy Cluskey in the light of subsequent events. Perhaps he will now say the Government are running too much with the unions. The reality has turned out to be very different from that envisaged by Deputy Cluskey and others.
The measures applied through the last understanding have made a very worth-while contribution to ameliorating the general employment situation. In addition, funds have been made available since the budget to support the level of activity and employment on various public works programmes. We have committed ourselves to undertaking a substantive list of measures set out in the understanding which we will implement when that understanding is endorsed. I welcome the decision taken today by ICTU which is overwhelmingly in favour of the understanding and when it has been endorsed by both sides I will announce in greater detail the further commitments the Government are making in terms of maintaining employment and developing further employment opportunities. The Government will make no apology if in order to achieve that objective we stretch our borrowing requirement a little more than had been expected at the beginning of the year. I await with interest and confidence the outcome of further developments with the partners and when the understanding is endorsed I and my colleagues will announce further details.
I recognise that trends in relation to the borrowing requirements diverge from the target I set at the beginning of the year, but that is not surprising since international economic developments have proved less favourable than then expected. I do not wish to speculate even at this stage on the precise out-turn for the year since partial data can be misleading because of the different timing of various revenues and expenditures during the year. However, it is fair to say that the level of borrowing will significantly exceed the budget target. It has been influenced by a number of factors. For example, the impact of the international recession led to an increase in the number of unemployed and to increased expenditure on unemployment benefit.
In other cases the Government deliberately decided to allow increases in expenditure in order to sustain economic activity and to protect employment in the light of developments which occurred since the budget was formulated. Much of the additional expenditure is on productive investment which will strengthen our ability to avail of new opportunities when the world situation improves.
Here I want to deal with the self-contradictory and irreconcilable positions taken up by the Opposition. On the one hand they attempt to make capital out of the likelihood that the outturn will not be on target while ignoring the legitimate reasons for the divergence. At the same time they put forward proposals which, if implemented, would enormously increase the imbalance that already exists. Even in the very terms of their amendment they are concerned about everything; I was surprised that they did not include the weather. They are concerned about the rise in prices. I have dealt with that and it is not as severe as they hoped it would be. They are concerned about unemployment and public borrowing. It is fairly evident from what Deputy Barry was suggesting, even in the course of his final contribution, that he thought we should extend the concessions we made to the farmers to the tourist industry and to industries generally. He mentioned anything that occurred to him.
: I asked the Minister to explain how he was going to do it.
: He is the spokesman for the party that is concerned about the borrowing requirement. That is not too surprising because these were the gentlemen who when they were individually vocal during the holiday period were very inconsistent, who were asking for expenditures here, there and everywhere. We did not meet their wishes. Deputy Boland said it was clearly imperative that large additional allocations should be made immediately to all organisations in the health field who were finding it impossible to operate at their full potential. That was on 13 September. Deputy Jim Mitchell suggested that the Government should shoulder at least half the cost of any new national understanding through increases in tax allowances, reductions in social welfare contributions and by food subsidies. He said the extra pay element agreed by employers should be tax free so that the settlement figure eventually arrived at would be considerably below the current rate of inflation by maintaining the workers' spending power. This was on 28 August.
Deputy John Kelly was the one man Opposition speaking with many tongues on behalf of everybody with his usual degree of enthusiasm and flair. Following news of further job losses at some stage in August he called for major increases in subsidies to hard-pressed sectors of industry. So that the Labour Party will not think that I am ignoring them, Deputy Barry Desmond called for an autumn budget to provide Supplementary Estimates aimed at saving public service programmes. I should be asked to perform a miracle, to provide more money but not to undertake a budget for another purpose. He said these programmes were grinding to a halt. These are the gentlemen who are now expressing their concern about the borrowing requirement. Who could cost all the demands they were making? It is no reflection on my advisers that they could not cost them but they could and did cost the concessions that were asked for here in the course of the Finance Bill and which were pressed very strongly on me by the same Opposition parties, by Deputy Barry and Deputy O'Leary who is absent as he tends to be during these debates. The amendments proposed to that Bill would, in 1980, come to £371 million and in the full year £518 million. Yet they are concerned about the borrowing requirement. Are we going to have some reality in this debate?
: Not until the Minister sits down, anyway.
: Perhaps they are only speaking for themselves and perhaps it is only when they put their names down together that they can express this collective concern about the borrowing requirement. I certainly could not steer a course between these impossibles but it is fair to say I have been steering a balanced course, as have the Government. Obviously the approach of the Opposition would give rise to serious consideration for the public finances. One of the reasons why the Exchequer borrowing this year is likely to be higher than that which was budgeted for lies in the development of public service pay. The combined effects of the general pay increases under the national understanding and the special pay increases agreed during the year will mean the additional cost of public sector pay will well exceed the budget provisions of £100 million. These additional costs will, of course, be partly offset by tax revenue increases which will be associated with higher incomes but there will still be an addition to the Exchequer borrowing requirement.
I acknowledge that in my budget speech I contemplated the possibility of supplementary measures either by way of increasing revenue or decreasing services to cover any excess cost in public service pay and pensions. I have, however, decided against that course this year for two reasons. First, any such offsetting action, whether by way of higher taxes of expenditure cuts, would have a deflationary impact on the economy which would be undesirable at present. Second, there is the obvious question of timing; the size of the excess on the budget provision under special pay increases particularly is not yet fully known and even a reasonably reliable estimate of the order of its magnitude is only becoming available in recent weeks. For instance, the cost of the teachers' review body's recommendation and the subsequent developments on that will only become known today and over the next days and it would not be practicable for that reason to have introduced a supplementary budget until such time as all these matters are known. But by the time one would have that full picture the actions one could take on the revenue and taxation sides would not in any way effectively bridge the gap between the target for the borrowing requirement I set out and what is emerging in the meantime.
That does not mean that the excess costs can be forgotten about. The need to deal with these must be one of the major factors which will be borne in mind currently by the Government in our expenditure for next year and subsequently in preparing the budget for next year. The likelihood that the borrowing would exceed the target is, of course, unwelcome. I said in my budget speech that initial progress has been made this year towards bringing our finances into balance and it would clearly have to be built upon in subsequent years and the fact that progress this year will be less than I aimed for clearly implies a need for correction where possible in the years to come.
While one might say that the expectation and the hope is for a better year in 1981 than was experienced in 1980, one yet does not know how it is going to turn out. Obviously the Government will have to adjust their policies in 1981 to ensure, in line with all our other partners, that we maintain the balance I have been referring to. The climate for 1981 does contain, internationally, some hopeful elements but they are not such as to point to the situation in which a major Government retreat from the areas of job creation and support for the economy would be offset by the spontaneous buoyancy in the economy induced by external forces.
The need in 1981 may be to reconcile progress towards greater balances in the public finances with a continual need for high expenditure in certain essential areas for the development of the economy particularly in infrastructure and developmental needs. It is not going to be easy to effect this reconciliation but it would be impossible if every area of decision taken by the Government, for example in relation to the tax base or revenue sources, was to be regarded as sacrosanct.
I showed in my budget this year that seemingly insurmountable problems of fiscal policy can be resolved if there is a sufficiently open-minded approach. I have just indirectly referred to the radical income tax measures introduced earlier this year. In regard to that I failed to understand the logic of Deputy FitzGerald's statement about the drop in living standards. Is he seriously complaining that 83,000 people have been taken out of the tax net? Is he seriously complaining that over 180,000 of those in the higher tax bands came down to the lower tax bands? Is he making representations on their behalf that they should be put back into the tax net or into the higher tax bands? If he is he is not in line with any views I have heard from those sectors at any time since the budget.
I said I would talk about planning because an analysis is one thing and another is the determination of how we cope with this. The Taoiseach in forming his Government decided to return an economic planning function which is an essential function of Government to the office of the Minister for Finance. The demands then of overseeing the short-term management of the economy in this particularly difficult year are complicated by our having for the first time a wholly independent currency but this has not prevented me and the Government from giving proper attention to the planning process. For some months past, while the Opposition were talking with their diverse tongues which did not harmonise, we have been pursuing this process and we intend to accelerate it, developing the planning responsibility of Central Government and the Department of Finance in the first instance and also the obligations and potential of other Departments.
Frankly I do not think that the importance of planning in our circumstances can be over-rated. Many of the difficulties the economy experiences at present could ease with the next economic upswing. But it has to be said that there are some more deep-seated problems we cannot hope to solve in the short-term. If these are to be overcome major changes must be effected in the economy and the way we do these things. The task of planning is to identify and carry through these fundamental changes. Therefore, in the first instance, the pace of our economic development will depend on the efficiency with which we apply our resources, the priorities we apply. It is not for me to comment on how this will be demonstrated by various Ministers. But, taking a Department such as Education, one can see that one can fix priorities in that area which will be geared to exploiting potential; I do not know if this has been said by any of my colleagues. For instance we have a Government sub-committee dealing with the need to provide adequate engineering services so badly needed in our economy and to ensure that the allocations, say, within that Department—I am giving an example—will be such as to meet the needs and potential that are there. That is an example of the kind of exercise which is being undertaken within each Department and by Government centrally.
Obviously it is important for us to use these scarce resources effectively. Obviously as well the problem of the seemingly intractable demand on public expenditure, pay and non-pay items, in the public service must be faced. Reconciling these demands with the need to make adequate and continuing provision for investment in the public sector is vitally important. Given the severity of the financial constraints that one faces here the maximum possible value in terms of progress towards attaining the Government's objectives must be obtained from every single £ of public expenditure. We cannot just keep building on services that have been there for five or ten years, some of them for 30 years, as if one could take an incremental approach only. The fact is that there has been an unwelcome trend in the growth of the public expenditure programme over the last ten years to the point now that we must look at other alternatives. My intention is to see that these are presented, allocated and applied through each Department in a way that demonstrates clearly our priorities having regard to the scarce financial resources that are there and will remain there. One of the things we have done in this connection is to arrange for the appointment and active involvement in each Department of a senior planning officer answerable to the planning section of my Department. When one thinks of the fact that some Departments, such as the Department of the Environment, have available to them such significant public funds it is fairly evident that one must have a planning, positive, aggressive function of that nature within the Department so that one will not simply be faced with reacting to the demands that come in constantly, such as the demands which Deputy Fitzpatrick made during the course of the holidays. I forgot to include him in my original extract of the individual cries of the Opposition during the holiday period.
These will be seen to be really developmental agencies of Government planning policy. The aim is to achieve a greater operational integration between planning and the budgetary process. To that end I have been preparing for some time for the Government an overall plan for next year's public expenditure which will form the basis—it does now—of the Government's approach to expenditure allocation as we start examination of the Estimates. That is under way as of now. The aim is to place this plan firmly in the context of a consistent, well thought-out approach to the longer-term development of the economy which will follow later with the publication of the planning document next year.
: When will that be?
: Next year, in the first half of next year.
: That is, up to June?
: Up to June.
: I would like to tie it down——
: I am rather pressed for time. If the Deputy would put a question down I will give him all the details.
: We like to have these dates precisely.
: I want to say in this connection that I have given particular attention to making the maximum possible provision for productive infrastructural investment because it generates employment directly. It also eases the physical constraints on growth.
We are examining the results of the operation that has been undertaken already. I am now bringing to the Government, at the request of the Taoiseach and Government, with a view to taking policy decisions for next year, a series of options, alternatives and priorities which will be clearly evident in the allocations of public expenditure as they emerge at the beginning of the year. Also as part of this on-going analysis I have set up a small committee to initiate and consider proposals for the transfer of what hitherto, departmentally, would have been financed purely from the public sector. This will enable us to see what areas might be taken up by the private sector or what other actions can be taken so that we can unburden the capital programme of some of these areas which, as the Taoiseach quite rightly said in opening this debate, in other countries is not covered within the public capital programme.
Incidentally we are flattered to find that for once the Opposition are imitating us in what we are actually doing. Some of the suggestions which Deputy FitzGerald made—I do not know whether they were made as a consequence of instinct or otherwise——
: My speech was written before I received the Taoiseach's.
: Funnily enough they were well under way months before Deputy FitzGerald rose to his feet in the House.
: Which ones?
: An opportunity will indeed be provided to the private sector to deal with this area. I should like to say particularly that we do expect to get a significant response because of the major developmental opportunities that are there, but these will be developed further and announced over the next few months.
I want to refer to one other point before coming to my final two. That is, the question of special pay increases. I mention that as being a serious problem for public finance. It is fair to say that commentators and editorial writers, when a particular group that serve an important function in society come up—I do not want to name them; we have had some of them in the course of the year—would say generally that they deserve a special response. It is fair to say that at least three or four of them have got a special response. What is not recognised—and this is rather serious—is that sometimes the consequences of these special increases, supported by almost everybody, go right across the board to the extent that the application of special increases becomes a general entitlement throughout the whole of the public sector. If such commentators and editorial writers, in analysing, as they might do objectively the merits or otherwise of a special group or groups within our society—and I do not think I need name them—if they knew that the consequences of all of these were something different then we might get a more balanced view. I am not saying that there are not special groups, or that they might not merit special pay increases. But I am saying that, by definition, we cannot all be special.
: Hear, hear.
: One of the problems the Government are examining and then consulting with my colleague, the Minister for the Public Service, about is this deluge of linkages, relativities and differentials that seems to determine that once one special group get apparently what may be determined for them then the general mass benefits. Obviously I must acknowledge that that has become a problem for Government finances and it did not start today or yesterday. I particularly welcome the overwhelming acceptance today by the Congress of Trade Unions of the proposal for the second national understanding. When, as I hope, this acceptance is endorsed by the employers, the Government will prove their commitment to what they have agreed with their social partners by promoting extra employment activities. I recognise, as do the Opposition Members, that this will put a strain on the borrowing requirement but will, as already said keep it at very much less than the record figures reached in the days of the Coalition Government.
: Will the Minister be making up the shortfall of 15,000 jobs which he did not honour?
: Nobody interrupted Deputy Cluskey.
: Deputy Cluskey has brought me to the last point I wish to make.
: No interruptions, Deputy Cluskey, please. No other Deputy was interrupted.
: I shall have more to say on the national understanding when it is endorsed by both sides. Deputy Cluskey in the course of this debate said:
There must be immediate cuts in bank interest rates so as to restore investment for productive purposes, reduce the interest burden on public borrowing and to ease the outgoings of mortgage holders. No other action would have such a dramatic impact on the economy as this.
No other action. That is what Deputy Cluskey said here two days ago. Of course, we all want lower interest rates but let me tell the Deputy the reality about interest rates. He should be aware that at no stage over the last ten months—and this is not subjective comment, it is fact—has our level of interest rates have been lower in comparison with those applying throughout the European Community. Only two countries at present have lower levels of interest rates —West Germany with 11½ per cent and the Netherlands with 11¼ per cent.
: What interest rates?
: What are their inflation rates and unemployment rates?
: Deputy, the Minister has very little time.
: What is the lending rate?
: I have three minutes left and I wish to make this point.
: The Minister has only a couple of minutes left, please.
: This is the reality now. I want to tie this up with the whole question of the exchange rate. In regard to what Deputy FitzGerald had to say here in this context and the unhelpful manner in which he misrepresented it, saying that our exchange rate had fallen over the last number of months, hours before he spoke our exchange rate was well above halfway along the band of the EMS, if Deputy FitzGerald wishes to check. It is natural, having regard to the very long period for which we have been associated with sterling, that the immediate reaction every day relates to sterling and the punt falling against it. We are not going to correct the habits of 150 years in our thinking overnight. In fairness, I must say that Deputy FitzGerald concentrated on the EMS.
: Yes, I did.
: However, in so concentrating, he gave a wrong impression. It is misleading to misrepresent the situation. Every day there will be a new quote from each of the currencies within the EMS. If, with each small movement, upwards or downwards, we are to get a comment from Opposition spokesmen or others about the punt plummeting or rising, it is an attempt to undermine confidence. It is a fact, which Deputy FitzGerald knows very well, that we have over the last six months in particular, been from the middle to the top band within the EMS currencies.
: Is the report true that the Central Bank had to intervene to protect the rate? Is that correct or not?
: The Deputy has done enough damage.
: Is that report correct or not?
: The Minister has two minutes.
(Interruptions.)
: The Deputy can write again to The Times but I insist——
: The Minister has refused to reply to the question.
: No interruptions, please.
: I insist on making my point.
: The Minister has two minutes left. No interruptions, please. The Deputy was not interrupted.
: We have had an extraordinary kind of presentation. Listen to this, as an example of the comments we get every day——
Dr. Fitzgerald
: There are not interventions by the Central Bank every day, I hope.
: This quotation appeared in today's The Irish Press. The article is headed “Bad day for IR£ in the EMS”. It said: “On the European front there were big losses for the punt against all of our partner currencies and by the end of the afternoon session the Irish currency was only 0.07 per cent above centre of the band”. That is the gloomy news which has come from the EMS— that we slipped from third to fourth place. This is meant to be a dramatic development. Anyone looking at the graph of the Irish pound in the EMS over the last six months will find that, of all currencies it has been safely and consistently in the middle of the band—perhaps it touches the middle at times but if such a small per cent change is going to be seen as a cause for excesses as Deputy FitzGerald suggests——
: The central Bank had to intervene to protect it.
: Every Central Bank has its function within the EMS as I think Deputy FitzGerald knows. If he does not he should. That is the whole purpose of the system. I hope I recognise the objective problems existing and that I have demonstrated that the changes which have occurred since the budget strategy did mean adjustments. These adjustments which have affected the public finances generally have been not only justifiable but desirable.
In conclusion, I am not saying that everything is optimistic and that there is no need for discipline and that for instance industry should not take advantage of the great opportunities in the exchange rate with Britain and the very low interest rates which they have never before had. I am saying that the purpose of this debate appears to have been to mislead and to misrepresent. Some of it has got to newspapers elsewhere, which is regrettable but we can cope with that. The economy is not only sound, but it is being managed effectively and as long as this Government remain, that is the way it will be.
: What a swan song.
: The Minister has one major contribution to make to the Irish economy—go to the country.
: Deputy Cluskey should go to the country in Dublin.
: I was confused between Derry and elsewhere.
: When Deputy Cluskey is finished, the Chair will put the question.
: If the Chair wants to put the question, he should start with the Taoiseach who interrupted. I speak for the Labour Party on a very serious problem.
: Deputy Cluskey, please. The Chair will put the question.
: The Dublin—Mayo— Derry—Donegal—Kerry man has interrupted.
Question put: "That the words proposed to be deleted stand."
The Dáil divided. Tá: 73; Níl: 57.
Tá
- Ahern, Bertie.
- Ahern, Kit.
- Allen, Lorcan.
- Andrews, David.
- Andrews, Niall.
- Aylward, Liam.
- Barrett, Sylvester.
- Brady, Gerard.
- Brady, Vincent.
- Briscoe, Ben.
- Cronin, Jerry.
- Daly, Brendan.
- de Valera, Síle.
- Doherty, Seán.
- Fahey, Jackie.
- Farrell, Joe.
- Filgate, Eddie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom. (Dublin South-Central).
- Fitzsimons, James N.
- Flynn, Pádraig.
- Fox, Christopher J.
- French, Seán.
- Gallagher, Denis
- Gallagher, James.
- Geoghegan-Quinn, Máire.
- Gibbons, Jim.
- Haughey, Charles J.
- Herbert, Michael.
- Hussey, Thomas.
- Keegan, Seán.
- Kenneally, William.
- Killeen, Tim.
- Killilea, Mark.
- Lalor, Patrick J.
- Lawlor, Liam.
- Browne, Seán.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Cogan, Barry.
- Colley, George.
- Conaghan, Hugh.
- Connolly, Gerard.
- Cowen, Bernard.
- Crinion, Brendan.
- Lemass, Eileen.
- Lenihan, Brian.
- Leyden, Terry.
- Loughnane, William.
- Lynch, Jack.
- McCreevy, Charlie.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Morley, P.J.
- Murphy, Ciarán P.
- Noonan, Michael.
- O'Connor, Timothy C.
- O'Donoghue, Martin.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond.
- Power, Paddy.
- Smith, Michael.
- Tunney, Jim.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael J.
- Wyse, Pearse.
Níl
- Barry, Myra.
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Bermingham, Joseph.
- Boland, John.
- Burke, Joan.
- Burke, Liam.
- Byrne, Hugh.
- Clinton, Mark.
- Cluskey, Frank.
- Collins, Edward.
- Conlan, John F.
- Corish, Brendan,
- Cosgrave, Liam.
- Cosgrave, Michael J.
- Creed, Donal.
- Crotty, Kieran.
- D'Arcy, Michael J.
- Deasy, Martin A.
- Desmond, Eileen.
- Donegan, Patrick S.
- Donnellan, John F.
- Enright, Thomas W.
- FitzGerald, Garret.
- Fitzpatrick, Tom. (Cavan-Monaghan).
- Gilhawley, Eugene.
- Griffin, Brendan.
- Harte, Patrick D.
- Horgan, John.
- Kavanagh, Liam.
- Keating, Michael.
- Kelly, John.
- Kenny, Enda.
- L'Estrange, Gerry.
- Lipper, Mick.
- McMahon, Larry.
- Mannion, John M.
- Mitchell, Jim.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Brien, William.
- O'Connell, John.
- O'Donnell, Tom.
- O'Keeffe, Jim.
- O'Leary, Michael.
- O'Toole, Paddy.
- Pattison, Séamus.
- Quinn, Ruairí.
- Ryan, John J.
- Ryan, Richie.
- Spring, Dan.
- Taylor, Frank.
- Timmins, Godfrey.
- Treacy, Seán.
- Tully, James.
- White, James.
Tellers: Tá, Deputies Moore and Briscoe; Níl, Deputies L'Estrange and Horgan.
Question declared carried.
Motion agreed to.