Dáil Éireann debate -
Thursday, 5 Feb 1981

Vol. 326 No. 6

Financial Resolutions, 1981. - Financial Resolution No. 9: General (Resumed).

Debate resumed on the following motion:

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

— (The Taoiseach).

Mr. Harte

I was dealing last evening with the commitment of the Government to the underprivileged, the sick and infirm. I was somewhat amazed at the concluding remarks of the Minister for Fisheries and Forestry when he said he was deeply interested in the affairs of the handicapped and pointed to the fact that the Government had removed VAT from wheelchairs. In glowing terms he took great credit for believing that a Government with such a commitment deserved the praise and support he was giving them. He boasted of the 25 per cent increase being given social welfare recipients in this budget. Let us examine whether or not this represents a 25 per cent increase to them. When one considers that all of these payments will not come into effect until April next when one-sixth of the year will have expired, this means that the remaining five-sixths of 25 per cent represents 21 per cent and, with inflation running at an annual rate of 19 per cent, these people are in fact getting an increase of 2 per cent. The real purchasing power of the increase being given them is a mere 2 per cent. A Government which in the Year of the Handicapped see fit to award the poorer section of the community an increase of 2 per cent and then boast in glowing terms of their social conscience and their great concern for the sick, handicapped and underprivileged are disgusting to say the least. It is disgusting that a party would read the social position of this country and its people in such a way. I want to protest in the strongest possible terms at such behaviour.

I welcome some aspects of the increased social welfare payments, especially to old age pensioneers. I congratulate the Council of Ireland of the Society of St. Vincent de Paul for reading the situation of our needy much more accurately than the Government elected to take care of them. I must acknowledge that some suggestions put forward in the pre-budget submission to the Government have been met, but others have not. I might be permitted to read some examples from this booklet. It says that at least one-third of the nation's children live in families dependent at least in part for their income on weekly social welfare payments. It is contended further that one-quarter of all households living on low incomes are headed by an elderly person. Households headed by an elderly person are 2.7 times as likely to be poor as other households. Households consisting of elderly people living alone are three times as likely to be poor as other households. Thirty per cent of all those interviewed lacked basic water amenities.

A sum of £2 per week cannot possibly purchase sufficient fuel to provide adequate heating for the elderly. About one in seven of our old people living alone are consistently lonely. That is an indictment of Irish society, a total indictment not alone of the present Government but of this House and of the concern we have for people in such need. Each of us in public life, in our constituencies, must be aware of elderly people and families living on well below the breadline, of old people who must go to bed early because they have insufficient finance to purchase coal or other fuel. They go to bed to keep themselves warm and remain in bed longer during the day because, by so doing, they will not feel the hunger pains as much.

We have come a long way in the last 50 years but there are still aspects of our society not being tackled properly. There is insufficient evidence in the present budget that we are tackling that matter in the way we should. I give credit to the new Minister for Health and for Social Welfare for being a concerned person, someone who wants to listen to what is going on. But if one looks around at the way moneys have been doled out to speculators to get back into business, to get on the gravy train of the Haughey administration, so that in turn they can pay into the coffers of the Fianna Fáil Party at election time, one begins to see the basic truth. These are the hard facts: you scratch my back and I will scratch yours. The Tacateers have returned, or are knocking at the door to get in, and the Government are encouraging them.

The Minister for Social Welfare quoted some figures worthy of examination. He said that the old age pensioner would have an increase from the present rate of £24.50 per week to £30.65 and showed that that was an increase of 25 per cent. It is not a 25 per cent increase and, in real terms, it is not £6.15 per week. When one takes into consideration the inflation rate of 18 per cent and the fact that he will not get the increase until April, it is only 75p per week. That old age pensioner will have to stand against the inflation that this budget has caused between now and then. In this year when the Government say they are so concerned about these people and when inflation is at 18 per cent — and that is not disputed by the Government—they have given these people 75p per week in real purchasing terms. Of course, a widow with a contributory pension who is just one year under the age for the old age pension is expected to live on £2.50 per week less; the new pension in this case is brought up to £28.15 per week. On the same calculation that I used in respect of the old age pensioner, that widow will receive a 67p increase in real purchasing terms.

Where is the commitment that this Government talk about in this year of the handicapped? This is what is called ringing the changes, making people believe that because they have more money in their pockets they are better off. Why cannot these people have their increases from the time the prices increase? Inflation started as a result of this budget last Friday with the increase in the price of petrol and it will get progressively worse between now and April when the old age pensioners, the widows and orphans, the families in need of social welfare benefits, get their increases. What are we doing? We are telling them that if they need money they should go to the social welfare officer and get the supplementary welfare allowance.

Is there any appreciation by the Government of a thing called human dignity? Have we lost all sight of the fact that people have pride and that they should not have to go on bended knees to the social welfare officer asking for a dole out to help them pay for the groceries or fuel, the footwear and the clothing that they need for their children? Why is it that we have not got imagination or appreciation? Are we fooling ourselves or do we not have the money to make the social welfare payments as and from the time other increases are granted? It is not beyond the bounds of imagination or possibility, and there is no administrative difficulty, that these increases to the elderly, to the sick, the infirm and the handicapped, could be made payable at the time of the budget. It is merely a book-keeping exercise and could easily be done. Why is it not done?

The Government might say that when we were in power we did not do it. What justification is there for concluding that because we did not do it—and it was wrong—that the Government should continue the error? One could say that it is traditional to do things in this way. Why cannot we change tradition if there is a need to change it? Why must someone like me argue and make accusations across the floor that the Government are not really interested in welfare of the needy until people in high places get embarrassed and say this is what should be done? We do not have any special gift from God of having greater concern for the sick and the old and the infirm. It is not because one is born into a particular tradition, the tradition of a political party, that one has a monopoly on this. Each of us has been given the same ability by our Creator to think out these things and recognise them and do something about them. Why is there so much silence on the Government benches when it comes to this? Why is there so much applause on the back benches when the Minister talks about the massive increases in social welfare, particularly for the elderly, the infirm and the handicapped? What has not been done is a fine-combing of what happens when it comes down to buying the butter, the bread, paying the rent, buying the shoes and the clothing.

On the figures given by the Minister, a widow on a contributory pension with three children gets an increase from £45 per week to £52.90 per week. The Minister argues that that was an increase of £7.90 per week. I argue that that family is £1 worse off. Again the increases are not available until April. So, with one-sixth of the year gone and taking into consideration that between the end of the year and the next budget in 1982 they will still feel the effects of this bad system of delayed payments, we are back to the example that the Minister gave when he was speaking on the budget. He said that a widow with three children would now be £7.90 better off. I dispute that and again I take into consideration inflation at 18 per cent and not 19 per cent which is the reckoning of the economists. The increase that that family received in the budget was 19 per cent and not 25 per cent. We calculate 19 per cent over 12 months but this family has only got the increase for ten months so in real terms it is 16 per cent and that is 2 per cent below the 18 per cent inflation, so in terms of purchasing power that family is £1 worse off. That is taking almost the lowest example to prove how kind the Government have been to the widows and orphans. If we take into consideration a family of four children then that position gets worse. If we take into consideration a family of five children the position is worse again. I do not know why this has not been exposed before now. I do not know, nor can I imagine, the thinking in the Department of Finance, advised by the Minister in his Department of Social Welfare, that will allow such things to happen. If one section of our society is to be protected, we must all agree that it should be the people who do not have any fathers to care for them, the mothers who have all the trouble of being father and mother and who are living on £52.90 a week.

Recently the former Taoiaeach, Deputy Lynch, speaking at a Fianna Fáil occasion, said it was important for the Fianna Fáil Party to stick together because in the event of a change of Government, such alternative Government would not last six weeks and Fianna Fáil would have to come back into power, maybe under a new leader—perhaps that is what Deputy Lynch was speaking about. The only hope the former Taoiseach had for this nation was that Fianna Fáil should stay together because if they did not there was no future for the Irish people.

What disgusted me about this was that Deputy Lynch was lecturing at a function where those present had paid £20 for their meal, as much as some hungry people in Dublin, Cork and rural Ireland were given to keep them for a week. He said unless people continued to vote for a party which kept them in such dire distress, God help the Irish. If there is ever a change of Government I hope that any party I support will have a greater commitment to the needs of our society than the present administration.

The Minister for Social Welfare told us he increased the free fuel allowance from £2 to £3 per week. He missed the point that the price of fuel has increased by that amount and that these people are not getting anything extra. What annoys me is that if he recognises the right of people to free fuel why can he not do the honourable thing and include this amount in their pension? Why do they have to make application and tell the community care office how poor and needy they are, or how some member of the family is not living up to his or her responsibility to support their parents? Why do they have to go through this humiliation? Why do they have to come to public representatives saying they got fuel vouchers last year but not this year although they are as poor, if not poorer this year than they were last year? Is there no appreciation for human dignity? Is there no imagination in the Department of Social Welfare, the Department of Finance or in the Government ranks, that old people have a certain amount of pride, no matter how poor they are? If free fuel is seen as a necessity, the Government should do the decent thing and include this allowance in their pensions.

There is another aspect on the social welfare scene to which I would like to refer, and that is the increase in maternity allowances. This is to be welcomed but I wonder if we are going far enough. I hope I will not be misinterpreted when I say this, and this view will be shared by many people in this House and in local authorities. When a young girl gets married and looks for maternity leave a few months later officials in county councils and health boards tell me, and I do not disagree with them, that for the few weeks before her official maternity leave starts that young woman, for physical reasons which must be understood and sympathised with, is not concentrating on her job. She goes off sick two or three weeks before her maternity leave officially starts. She is justified in doing this because her doctor recommends it and no one is disputing that. When her official maternity leave terminates she might not be fit to return to work and will continue on sick leave, which she is also entitled to. This means that in many cases maternity leave is not for 14 weeks, as provided in the budget, but can be extended to 20 weeks or even six months.

There is the disruption in her place of employment to be considered. During the time she is off work her replacement has to learn the ropes for the first few weeks and this has an upsetting effect on the place of employment. When the young lady returns to work after four, five or six months, she is out of tune with what is happening in the organisation. I wonder if we have reached the point where we should be seriously looking at a system which would pay young women to stay at home while they are having a family?

On one of my trips abroad to a communist country, Bulgaria, one of the weakest, if not the weakest, economy in Europe, I learned that everyone, man and woman, is guaranteed a job. When a young woman announces she is pregnant she is entitled to her weeks wages for two years from that date forward to stay at home and look after her child. I wonder if we should be heading in that direction. I have not studied the economics of the situation but I imagine it would lead to economic convulsions to deal with it right away, because some people would take advantage of it, and it could be argued that others are excluded. We are going in that direction and sooner or later we will have to look at the facts. What I said is really happening at present and the increases provided by the Minister are not the answer to maternity leave.

In the budget the Minister announced that he was providing £250,000 to examine the potato industry. When we talk about potatoes we are talking about Donegal. The potato seed industry in that county is so basic to the agricultural industry that it is an insult to offer the pittance given in the budget. Many potato growers believed from what they read in the papers that this £250,000 would benefit them directly, but that was not the case. Not one penny of that £250,000 will go directly into the pockets of the potato growers in County Donegal, many of whom had their potatoes collected by the Potato Marketing Board as far back as September, October and November of last year and have not yet been told what the price per ton will be, nor have they been paid. I want to put on record that I do not know any section of the agricultural industry who work as hard as the potato growers in County Donegal. I say that with apologies to no one, either to other farmers in County Donegal or to farmers in any other part of the country. The potato industry in Donegal demands hard work, long hours, dedication and a big effort. All growers, both present and past, involved in the potato growing industry, deserve recognition. It is a hard earned living which has gone wrong in the recent past.

I am not quite sure whether the Potato Marketing Board continues to hold the confidence of the potato growers in County Donegal. I do not want to say they have lost that confidence because I am not sure, but I do know the entire potato industry has got to be reorganised quickly because many people — not all my supporters, many of them are Government supporters who supported the Government in the recent by-election, financially in an effort——

Mr. Smith

The majority.

Mr. Harte

Deputy Smith, apparently, knows more about the politics of the majority and the minority of potato growers in Donegal than I do. I am not sure if it was the majority or the minority but if what Deputy Smith says is correct, little thanks the Government have given them in the budget. They have ignored their pleas and they have been lobbying Ministers, Deputies and county councillors. We have had deputations here and my doorbell never stops ringing with hard pressed farmers seeking, not begging help, saying they have grown the potatoes, produced the crop and put the effort into it. The whole thing has gone wrong and they have been let down. That is the message they are trying to get across. Deputy Smith says the majority of them voted for his party candidate in the by-election. Shame on Deputy Smith for admitting it and supporting a party that has done so little in return.

I am not sure what the economic position is with the different families that traditionally grow potatoes, people who are recognised as being agricultural experts in the potato industry. They may have little nest eggs that will take them over the present economic difficulties. They may not. Whatever the position is, the Government is in default for doing nothing about it. £250,000 has been described as a gob stopper to keep noisy farmers quiet in County Donegal, to get them off the backs of Fianna Fáil Deputies, Senators and county councillors. They want them off their backs because they are annoying them. They did not annoy them last year or any previous year. They are doing it this year because they are justified in so doing and the sooner the Government and young men like Deputy Smith, who has a responsibility in the agricultural industry, does something about it, the better.

I heard Government speakers talk about the tourist industry and point to the fact that, because of our low currency rate, many people will be coming from Great Britain and Northern Ireland to the Republic and we are in for a boom period. I hope they are right. The people to whom I have been talking in the North of Ireland do not see it that way. Those people are from both traditions. They are just Irish people who live north of the Border and where they go on Sunday morning is of little concern. They are not talking about coming to the Republic on their summer holidays because our punt is now 74p against sterling. They will come across the Border for a meal, which is now 26 per cent cheaper in Southern hotels, but the people in the North can now go to the Mediterranean, to other European countries and to Florida for three-quarters of the price they paid last year. That is the advantage. I hope the predictions and forecasts made by the tourist board and the optimism shared by the Government comes to pass but I have grave doubts.

In County Donegal, which has so many people unemployed, living in bad houses, paying telephone charges for a telephone system that does not work, having to use bad roads and an inadequate public transport service, there is nothing in the budget to suggest that the support which the present Government have had in the past will continue.

There are now almost 2,000 families in need of rehousing in County Donegal. There is no hope whatsoever for them in the budget. The Government are going to give money to the building tycoons. We know them, we see them in the corridors of power, talking in the lobbies of Leinster House outside the Chamber. We recognise them mostly by the suits and shoes they wear and the gold rings on their fingers. As I said earlier, they were the backbone of the Tacateers of the sixties and early seventies — mostly the sixties. The former Taoiseach, Deputy Lynch, to his credit, got rid of the leeches of political life. They are people who have more control over the destiny of the nation than people elected, the faceless men in public life, the guys who can lobby the Ministers, twist their arms, to get things done and who do not have to stand before the general public at election time. He is there all the time. If there is a change of Government, it will not be too long before he changes his allegiance. I wonder how many of them would be lobbying Coalition Government Ministers if we had won the last election. Since 1932, Fianna Fáil have never been beaten twice in a general election. There are leeches who persuade Government Ministers that building too many local authority houses, floods the market with new houses. The Government, therefore, do not proceed to build local authority houses in sufficient numbers to meet the needs of people living in bad houses. If they did, there would be too many houses on the market and the tycoons in the building industry who are so closely embedded in the Fianna Fáil party, would not be given as much money for the houses they build. If this is unfair criticism, someone can paint another picture but that is how I see it.

If ever a Government stands condemned this Fianna Fáil administration does. In the last two or three years one of the major decisions taken by the Government, under a different leader but collective responsibility makes them all responsible, was to join the EMS. We joined the EMS because we were told it represented a stable currency. We joined it because sterling was falling and was getting dangerously low. We joined it because we all wanted to be good Europeans and we were told so but we joined it blindly and the people who knew the facts—I mention Deputy Lynch as Taoiseach, Deputy Colley who was Tánaiste, Deputy O'Donoghue who was Minister for Economic Planning and Development and the other members of the Cabinet—did not inform the Government backbenchers of the true nature of the risks we were taking in joining the EMS. The Opposition were not informed of the true position. I could not figure out what was happening but I was tempted by the fact that I believed Ireland should be part of Europe. Therefore, the carrot of a European monetary system appealed to me as, undoubtedly, it did to other members of my party and Government backbenchers.

It is now time that we admitted that the EMS, a well-intentioned decision, has gone wrong. While some people in Irish Society have benefited it must be admitted that a greater number have not. I should like to give some details about this and argue the point which has a political base. In the sixties the late Seán Lemass argued that if Irish unity was to be a real thing, was to be on the cards or considered by people north of the Border there would have to be social welfare benefits here equal to their own. The gap was being narrowly bridged until we broke with sterling and joined the EMS. Now there is a 26 per cent difference. If the Government do not understand what I am talking about they should take into consideration the case I shall put forward.

Two people who worked in Northern Ireland have now moved to the Republic and are being paid a British old age or retirement pension and have a great benefit. They would tell any Member that they are living in the lap of luxury now, that times were never so good. However, if one approached a person who served this part of Ireland over a number of years, a retired civil servant, Army officer or ordinary soldier, a retired garda, or their widows, and are now living in Northern Ireland one would be told that they are worse off. In fact, they are poverty stricken because their pensions have been cut by 28 per cent.

Weekly I get telephone calls from people who are living in Northern Ireland on behalf of widows of civil servants now living in Derry, Omagh or Coleraine. It is pointed out to me that they can no longer live on their pension and I am asked if anything can be done about converting the punt into sterling for them. It is only out of despair that such requests are made because in most cases they are aware of the answer. What the late Seán Lémass forecast and tried to achieve in the sixties his son-in-law, Deputy Haughey, the Taoiseach, has undone by a stroke of the pen. I have been informed that had we remained linked to sterling our repayments on foreign borrowing would be 26 per cent less and we would have saved about £170 million per year. I should like to give an example of the position faced by a constituent of mine although I accept that there are many in this position. A young dynamic farmer, on this side, who must get up at 6.30 in the morning and does not finish work until 10.30 p.m., by tradition had his bank account in Northern Ireland. Naturally, a farmer's bank account is mostly in the overdraft situation. The young person concerned had an overdraft of £120,000 and now must repay that in sterling. It is now going to cost him £40,000 more to do so. He is paying 15 or 16 per cent interest not on £120,000 but on £160,000. That is one of the tragedies of us having joined the EMS and there is no way out of it.

It is no good saying that that young farmer should have transferred his money to the Republic because it would be in contradiction with the Fianna Fáil Party's position of being anti-partitionist to ignore the Border. The State has also done the same thing. The State borrowed money abroad that would have cost us 26 per cent less had we stayed with sterling. The public external debt by the end of 1980 was £2,900 million with between £700 million and £1,000 million due in 1981. External reserves are £1,340 million and if our currency falls 11 per cent the true cost of repaying those loans escalates sharply. The interest rate could become 30 per cent or even more. We have imported inflation. Our imports last year amounted to £5,425 million while our exports amounted to £4,134 million. The difference is nearly £1,300 million. Imports from Britain and Northern Ireland amounted to £2,757 million, up from £2,408 million the previous year. Exports there were £1,768 million, up from £1,624 million. The rise in imports was 14 per cent and exports 9 per cent. There is no evidence from that that the fall in our currency has helped us to win a larger share of the British or Northern Ireland Markets. In fact, we have not benefited as forecast.

The reason I say that the whole thing has gone wrong is that the forecast of the Government on entry to the EMS was that our currency would get stronger and our difficulty was going to be to compete on the British market. Well, if we have got stability in our currency we have it with countries with whom we do not do business but we have instability with Northern Ireland and Great Britain with whom we do business. It shocks me and I believe that as a result Irish unity is back a hundred years. On the question of prices, I believe that, thanks to Britain's successful policy of keeping sterling high, inflation is expected to halve there this year to below 10 per cent. Already it is down from 20 to 15 per cent whereas we are at 18-19 per cent. Because of our weak currency, prices will rise faster this year. The economic background to the budget admits an average fall of 11 per cent in our currency last year. This will add at least 5 per cent to domestic inflation. With sterling the reverse would have been the position. Admittedly some businesses have done well and that is to be welcomed, as most of these businesses were not doing well because of policies pursued by this and past Fianna Fáil Governments. In Border towns because of the tariff barriers and because of economic differences, mostly to the disadvantage of people in the Republic, people had the advantage of going into Northern Ireland to shop at the expense of traders in the Border towns. By mistake it has been reversed and the Border towns are now benefiting because of the currency difference, not because of the economic policy of Fianna Fáil, not because of the forecasting of Fianna Fáil when we joined the EMS, because their forecast was that our £ was going to be stronger, but more in spite of what Fianna Fáil planned.

What are the effects? Cattle dealers in the Republic now cannot compete with cattle dealers from Northern Ireland. Abattoirs and meat factories are closing in the Republic because Northern buyers are coming down here and paying sterling for our cattle. Therefore, there is a net gain and a greater net loss. Economic convulsion is happening in this State and we are not aware of it because of the bad planning. There is also the terrible difficulty that when we talk about Irish unity nobody here now can afford to go to Northern Ireland on holidays. It is coming this way. That might be a good thing, but no one is going from the State. One of the faults that we identify is that not enough of us are going up to see how they live up there.

One thing I must say before I conclude is that if we were with sterling the timber we import from Scandinavia would be 26 per cent less. Our oil which we buy with dollars would be 26 per cent less. Our petrol, diesel, steel and coal which we import from Poland, the US and Britain, and foreign motor cars, would all be getting cheaper by 26 per cent. On that score I am told that British cars are being subsidised by their manufacturers because they would be priced out of existence if we were paying sterling for them. Deputy Callanan will appreciate that 98 per cent of our farm machinery is imported. All of that would be 26 per cent less if we were with sterling as also would be soya beans and animal feedstuffs. The farmers tell me that they are selling in IR£ and buying in sterling and this is causing havoc.

The only way that our joining the EMS can be undone is if we find oil off the west coast, if the British economy starts falling or if the EMS starts rising. Then our economy might be levelled off with that of Britain. Sterling has appreciated because of North Sea oil and because of high interest rates. Our leaving sterling meant that we were saying that we did not want to share Britain's North Sea oil and we did not want to benefit from high interest rates. Those people who do not listen to what I am saying will say that we are better off the way we are, that the £ sterling is too dear. If the £ sterling is too dear what they are really saying is that we had better not find oil off our west coast because the IR£ might then become too dear, so let us stay out here. That is an irrational argument.

Let me conclude by saying definitely —because it is the kernel of Irish politics and of what has me in public life—that any Government who have the political unity of Ireland as the cornerstone of their political philosophy and who have preached the unity of Ireland with constant regularity since their foundation, any Government who with their supporters believe that they and they alone are the true United Ireland party; any party who do all these things and do not produce and support economic, monetary and social policies consistent with that basic political position, but instead produce and support badly thought out policies which disrupt and interfere with the rights of Irish people on both sides of the Border to trade and deal with each other on terms which are fair and equal to each other, are in fact a partitionist party who forfeit the right to speak about Irish unity.

Fianna Fáil, past and present, have built economic partition between North and South and have introduced and supported economic policies which have discriminated against one-third of the Irish people because one-third of us live north of the Border and that discrimination is against Nationalist as well as Unionist. It may have been intended to be against British goods, but that is what it has meant to Irish people living north of the Border. The currency partition compounds all the mistakes and errors of this and past Governments. Never before has Partition been so complete. That is the net result of badly thought out policies. Whether it is palatable or otherwise, it is something I believe deeply and I have yet to be convinced that I am wrong. If you preach the political unity of Ireland your economic policies, your currency policies, your financial policy, your educational policies, your agricultural policies and every other policy must be consistent with the basic political philosophy, otherwise you are talking a lot of humbug. It was summarised in a fireside chat in a house in Donegal that I visited last Sunday evening when a young man said to me, "Paddy, the Fianna Fáil Party have no commitment to Irish unity. They are like the young boy who went to the confessional and told so many sins that the priest said to him, ‘Son, do you want to go to Heaven?' and he said, ‘I do, Father, but not yet."' It is the same with Fianna Fáil. They want a united Ireland — but not yet. They want to commit all the sins against it and hope at some stage that they will be forgiven by everybody and that by some freak of chance they will become the party that will unite the Irish people.

Mr. Callanan

I always like to listen to Deputy Harte because he is a great speaker and I believe he says what he actually means. He went to town on the fact that we joined the EMS and that this was a mistake. I am not a financial wizard and I will not go into the matter but I was of the opinion, as he said, that we would be higher than the £. The great reason for the punt's problems is the fact that sterling has gone up on account of the oil, which Deputy Harte mentioned. I wonder and I have heard economists wonder if Britain are so very well off with the pound being so high. Deputy Harte mentioned the price of cattle and I wonder where we would be last November, when cattle prices fell, if the punt were tied to sterling. Deputy Harte spoke of the Northern buyers who were able to give more for cattle here. I thought at the end of last year that was a good thing. Prices are good now but they were not good when people were panic-selling.

Our position has its advantages and disadvantages. If you compare our currency with the major European currencies I think we are fourth, and this is not bad. Perhaps the projections were not correct. I dread hearing people giving long-term forecasts of what will happen in Europe or elsewhere. It is like the case of wool. I never knew anybody who could forecast six months ahead what the position would be. I remember attending a sale abroad at one time and the wool was bought up so quickly that everybody thought it would double in price but before six months it dropped. The greatest experts could not tell that. My opinion about the whole European economic system is that it is very hard to forecast what will happen. I have reservations when I hear geniuses telling us what the situation will be in two or three years' time.

The budget got a poor press but I will not complain about the press. I often get a poor press and I often get a good press. It is a grand thing that the press are free to say whether something is good or bad. I think the budget got a bad press because we have so many pressure groups that are important to the press. None of them was satisfied with the budget. All of them expected more than they got. Deputy Cluskey once spoke here about a Coalition budget and said it was a budget of concern. The last budget was a budget of concern for the poor and under-privileged sections of the community who have no pressure groups to make themselves important. I believe that is why the budget got a poor press; I do not blame the press at all.

I am stating facts. I think somebody said the budget took from the rich and gave to the poor. That is what always happens. Anybody who thinks we can get free this or free that is mistaken because there is nothing free anywhere; somebody must pay. The only reasonable course for a Government is to strike a balance between the haves and the have-nots. You must tax the haves in order to give something to the have-nots and that is what the budget has done. Even in my own party I heard people express the hope that we would have a great budget because this is supposed to be an election year. I am fed up with dishonest declarations by all political parties approaching an election and, even though this is a hard budget for certain sections of the community, I am delighted that it is an honest budget. I have said this before but I am totally convinced that we are dealing with a very well educated electorate who will not be codded and any party that tries to do so will find that they will not get the answer they want.

I am also convinced that our youth are very concerned about the people who benefit in this budget and they will have a big say in the next election. I hear many saying the youth are not as good Christians as the older people. That is pure cod. The older people may have been better church-goers but the younger people have a great concern for the underprivileged. In my young days I do not know if we would organise walks and push barrows across Ireland to make money for the underprivileged but that is being done by the youth of today. I claim, in the words of the song, that we may have had good men but we never had better than the youth of today, and I am one of the older generation. They want leadership and they want truth. Undoubtedly, the economy is not in a good position; we are going through a recession. In the Donegal by-election at every church gate where I spoke I made it clear that I was not there to say that everything in the garden was rosy. Everything was not rosy due to one of the worst recessions in the lifetime of this Dáil or the previous one: the first was in 1974. What I said was that we were doing our best in that kind of situation. The budget has proved that we are endeavouring to do our best.

I am delighted that social welfare recipients, old age pensioners, small farmers on small farm social welfare all got increases. I am delighted that the small farmers, whether on factual or notional systems, are now getting a 20 per cent increase. It might be no harm that it was the other way last year because it gave an opportunity for those who were on notional to go on factual. Everybody spoke about the amount of fiddling going on in regard to small farm social welfare and I know many of them went on to the factual system and 80 per cent of them got an increase, which proves that there was no such fiddling as was assumed.

I give credit here where credit is due and criticise where I consider it necessary and I have a couple of criticisms to make regarding social welfare recipients. Nobody seems to talk of them but I shall continue to do so and perhaps if I continue long enough somebody will take heed. Old age pensions have been increased by practically every Government and increased well, even though Deputy Harte thinks that in real terms the benefits are not increased at all. Inflation has been running so high that very few incomes have been increased. The social welfare recipients have got a good increase in the budget but I cannot understand why no Government have considered increasing the limit of income for eligibility for an old age pension. It is still the case that a single person with, I think, anything over £6 cannot get the full old age pension. I am surprised that the Minister has not increased that limit. I have been talking about this for a long time. I am still talking about it and I suppose I will continue to see if something can be done about it.

The second point relates to the allowance given for caring for old people who are living at home. I have said on many occasions, and I will repeat it now, that elderly people want to die at home. The cost of keeping them in county homes is very high. I have said before that if I were Minister for Social Welfare I would give a decent allowance in respect of the care of old people. At the moment the conditions attached to the allowance are too restrictive and money is not paid to relatives. The allowance should be paid irrespective of the relationship to the old person concerned. I am convinced that many people who are at present in county homes would be kept in their own homes if the allowance were adequate. If the Government made the necessary change in the regulations there would be a saving in the long run. Some people have argued that if the change was made across the board it would cost a lot of money, but I do not agree with them. At least it would mean that those really in need could be accommodated in the county homes.

I am glad the Government have granted an increase in the free fuel allowance and I am also glad that long-term benefits have been increased. The unfortunate people in psychiatric hospitals had to try to exist on £2.50 per week pocket money but now the amount has been increased to £4. I had asked that they be given £5 pocket money and I want to make it clear that I sought this increase on medical grounds. I brought up this matter at meetings of the Western Health Board and I was informed that if a person was too fond of drink he might become a nuisance. I said allowances should be given on the instructions of the doctor or the nurse in charge. In my town, Ballinasloe, there is a psychiatric hospital and in Loughrea, which is in my constituency, there is a home for old people. People living in these institutions had only £2.50 per week and I must admit I had great pity for them. I am glad there has been an improvement in this area.

Deputy Harte was good enough to do what I have always said politicians should do, namely, to give credit where it was due. From my contacts with people who are not politically minded I know very well what they think of politicians. It is their view that the Opposition will criticise automatically anything the Government do but this argument does not hold with intelligent people. People not involved in politics themselves have little interest in political matters and their attitude is that one party will contradict the other whenever there is a debate on any current topic. It is my view that politics will have to change. By all means let us criticise where that is necessary but, equally, we should give credit where it is due. Until that is done there will be little respect for politics or democracy.

I should like to congratulate the Minister on his efforts to improve the lot of the underprivileged. As I said before, they have no union to speak on their behalf.

Next is the question of agriculture, which is my pet subject. Farmers have had a very bad year. There is no doubt about that. They probably would have had an even worse year if there had not been a difference between the punt and the £ sterling.

Mr. Harte

Prove that point.

Mr. Callanan

The Deputy proved that himself by saying that the Northern buyers were coming down and paying more for cattle than they could be sold at here.

Mr. Harte

We have a——

An Ceann Comhairle

Please, Deputy Harte. Deputy Callanan is in possession.

Mr. Callanan

I do not mind Deputy Harte. We are good friends. I hear a lot of talk about stopping the export of cattle, in order to provide cattle for our factories. I would be completely opposed to that. Some incentive for people to keep their calves should be provided in the package being presented by the Minister to the EEC on which we hope to have an answer within the next fortnight.

I remember 1974 very well and how we were treated by the factories when we were wholly dependent upon them. People were stopped from bringing their cattle into the factories, which was a disgrace. I am totally opposed to taking the competition out of the cattle trade, but we should endeavour to give an incentive to people to bring up the definitely falling cattle figures, which is serious. It is not right that the unfortunate producers of cattle should now have to take a smaller price because they cannot export. I worry as much as any Deputy here about the future of the factories because of the present scarcity of cattle.

Looking at what has been done for the farmer, Fine Gael looked for an end to the resource tax and this has been done away with. I never liked that tax. If I were narrowminded, I could say that only 3 per cent of the people in my county were affected by it, and could stand up and say that it should be continued because of that fact.

I never agreed with complete derating. I had reservations about completely derating houses. They should have been derated up to a certain valuation, but I was completely against derating mansions, as I said before. Whether we like it or not, nothing is free and the Fine Gael package cost £70 million. All farmers, irrespective of whether they were on social welfare or not, would have to be in the tax net, which would be a disaster for the very small farmer. The Government gave full derating on £50, half derating on £50 to £70 and above that the rates have to be paid. The Opposition members, when the agricultural grant was done away with, put up the argument which holds good now for the Government side. The person with a valuation up to £70 would, unless he had a very large family, be in the tax bracket and could put his tax against his rates. In no way would the £40 man be in the tax bracket, so whether he made money or not, he would have to pay his rates. The Government did a reasonably good job and there should not be any complaints about it and Opposition Deputies have not complained very bitterly. Their five points came up at a meeting of the Galway County Committee of Agriculture, of which I am chairman, and I put an amendment to them. I agreed with the removal of the resource tax, did not agree with complete derating, but with partial derating. We agreed on disease eradication levies. Again if I were to be narrowminded, I would say not many people were sending their cattle direct to the factories. The dairy trade was affected, but that was a good thing. I congratulate the Minister on that.

On the question of subsidising interest rates, we agreed partially on that but there should be a limit to the amount and a check on what the money was being borrowed for, whether it was borrowed as a speculation to buy land when the person already had enough, or borrowed for the genuine purpose of development. We wanted that point clarified.

The last point was about stamp duty on transfer of farms. This was a tax which, with two others, was brought in by the Coalition Government when they removed the wealth tax. Some people tell me that Dáil Éireann did away with death duty but brought in life duty which proved, owing to the artificial value of land, to be much more severe than the death duty had been. There is hardship there and I would like to see this duty reduced.

Our amendment at the county committee meeting put forward that brothers, nephews and nieces should be included in the direct link on transfer within the family. They were not included in the Act. The only people included in what we call the one per cent on the interest are the sons and the daughters. There are special concessions when a favourite nephew or niece lives with the farmer in question, and a reduction in stamp duty, but if an uncle lived 30 miles away and left the place to his nephew or niece, the place would have to be sold to pay the stamp duty. The inclusion of these people in the direct link has not yet been done and the £70 million spent on the Fine Gael proposal did not give any substantial relief in my area. The Government acted reasonably.

Farmers are having a difficult time, although other sections of the community may not realise it. I come from an area with a number of small, hard-working farmers and am convinced that, unless EEC policy is changed in support of the common agricultural policy, things will be even more difficult for the farmers. At the moment, support is got through price rises but that is not the answer at all. One may get a percentage rise this year which is fair enough, but the cost of production will rise after it and what happened farmers in the past two years was that the price rise did not come, although the cost of production kept increasing.

At present, under EEC regulations, one is not allowed to subsidise agricultural produce. Even the national Government cannot do so. It was a great loss when our subsidies were withdrawn. The very important subsidies for ground limestone had to be phased out because we had to be good Europeans. If we get a 10 or 15 per cent rise this year, unless this continues each year, with the price of production going up and inflation, we will be in difficulties. Is that going to continue? I might be wrong, but I do not think it will. Last year we had the problem of Britain's refusal to pay its contribution towards CAP. West Germany and Britain, two very important members of the EEC, are kicking at the traces. Will they continue to subsidise costs so that these increases in price can be given each year? I would be much happier if a lot of this money were going towards the cost of production, the most important components of which are fertilisers and ground limestone. This is vital where I come from, because we have a number of small farmers who are endeavouring to increase production. They cannot increase, or even maintain, a fairly good stocking rate unless they put out a lot more artificial manure than a larger farmer. The small farmer must have a certain stocking rate to keep the farm viable. Would the Minister approach the EEC in an endeavour to get at least the first ten or 15 tonnes of artificial manure subsidised. There is a lot of talk about western drainage and the development of the west, but it is absolutely useless to put out manure on land which needs lime. I would put a limit on the subsidy for ground limestone but every farmer is entitled as a taxpayer, to a subsidy on the first ten tonnes of ground limestone. The EEC have fallen down on this.

At present no-one could complain about the price of cattle, which is fairly good. Is it fair to say that a farmer should get a 10 per cent price increase? I agree that an increase in the price would be good for everybody, but the cattle trade is a different matter. Many people have reduced their stock, particularly because of the panic about fodder. An unfortunate woman came to me the other day and told me her hay had gone bad and that she had not cut silage, although the Government had advised farmers to do so, an excellent thing to do because many farmers today have plenty of feed because of that advice. However, a number of people panicked, sold their cattle when the prices were bad and they find themselves without cattle this spring. To try to replace them will be one hell of a job.

I suggest that serious consideration be given — I have appealed for this time and again — to production subsidies. That is more important than price increases. Everything farmers produce ends up on the consumers' table and if price increases are too high there will be a drop in consumption and we would begin again the European mountains of butter and other things. We have got rid of the butter mountain and let us hope another will not be started. Therefore, I suggest that instead of big price rises farmers be given production subsidies. In the past two years farmers were caught badly by production costs. Tractors are not luxuries any more. What I am suggesting would mean that if there was a fall in price, at least the cost of production would be within reason.

I want to bring to the Minister's attention the recent revision of severely disadvantaged areas. Only a few district electoral divisions were taken in in my constituency although in the centre of the county a drain river runs right through Dunkellen. So far we have not got any response to appeals to drain that area. Consequently it is one of the most severely disadvantaged in the country. We had expected that the 12 western counties would be included as severely disadvantaged, and it is a bloody shame they were not. Although we are recognised as being severely disadvantaged, we do not qualify for the higher grants even after the recent revision. I am asking the Minister to contact the powers that be in the EEC to try to get the 12 western counties included as a severely handicapped area.

We are hoping to get the promised western package in the near future. I hope this package will include substantial grants for farmers in the West, particularly smaller farmers, for development and building. I have spoken repeatedly about this. I have a special interest in the 30-acre farm carrying heavy cows. That farm cannot be developed unless it has a yard to hold the cattle during the winter. It is no use cutting silage unless there is a yard to hold the cattle during the winter. Otherwise the cattle will get drowned in muck.

My case is that there should be substantial grants to help farmers to lay down such yards. It would allow farmers to take the heavy cattle off the fields during the winter. In the spring the fields would not be cut up as they are and therefore it would be possible to grow grass for silage. The yard would have to be in proportion to the size of the farm. We cannot bring smaller farmers into the development category unless such farmers have yards, which in turn would mean such farmers could have two cuts of silage every year.

Under earlier schemes transitional farmers and others got only the smaller 30 per cent grant whereas the larger farmers in the development category got the higher 45 per cent. That was a scandalous arrangement, completely biased against the smaller farmers. That was done under EEC Directive 159, and when I raised my voice against it when there were other people on these benches I was told I was only throwing cold water on the scheme. All farm organisations now admit that that scheme was biased against the smaller farmer. About £60 million was paid out under that scheme. I had intended to put questions to the Minister in relation to this scheme: how much money was paid out to farmers in the £30 valuation and under, how much was paid to farmers with valuations of between £30 and £100, and to those with valuations of more than £100? The replies would be astonishing.

Unless there is a change in that system under the promised western package we will have to conclude that an attempt is not being made to help the smaller farmers to develop. I hope the grants will be at least 50 per cent and that low interest loans will be made available to smaller farmers to help them to lay down yards for their cattle because there are many young energetic farmers who are extremely anxious to develop but who cannot because they cannot take their cattle off the farms in winter. Such farmers also need fertiliser and ground limestone subsidies so that they can manure their land properly.

As I have said, production subsidies are more important than big price increases. Price rises are all very well while they last but the farmer is in trouble when they cease. I appeal to the Minister to keep this point in mind because price rises cannot continue indefinitely.

Subject to the criticisms I have made, the Government have done a reasonable job in this budget. No farmer is satisfied, but nobody is ever satisfied with what he gets. It must be remembered that farmers have suffered a loss in income during the past two years which no other section of the community would tolerate. However, farmers are reasonable people and they realise that this loss was caused to a great extent by circumstances outside the control of the Government and that the Government did make an effort to come to their assistance. Today's farmer does not want handouts but he is developing an industry which is of vital importance to our economy. Things would have been much worse last year but for the income generated through the export of livestock. Unfortunately that income may be reduced this year due to the reduction in the herd.

Let not anyone say that the Fianna Fáil Party are not interested in promoting the growth of agriculture because I do not know of any other party who are more aware of the real situation of farmers, and the measures contained in this budget are more appropriate to their needs than the proposals put forward by Fine Gael. I am hopeful that farmers will have a better year in 1981 and that we will secure from the EEC a favourable western aid package which will enable the small farmer to develop his holding. Someone has said that the poor are getting poorer and the rich are getting richer and up to a point this has been happening.

I wish to refer briefly to local government and the increase in the Road Fund. In my county we have been given a substantial increase this year in the road grant and this is very important. As a member of a local authority I have had to listen to prophecies of doom and gloom about our financial situation and I have been told that we did not have even the price of a shovel. It is true that the roads have been deteriorating but the increase for this year shows that the Government are concerned to improve our infrastructure.

I understand that housing grants will be increased this year and I thank the Government for this. Much has been made of the fact that money was not freely available for local authority loans, but I would point out that until Fianna Fáil returned to office the amount of the local authority loan was too small to be of any use. Even the present loan of £12,000 is low for a person building a house. The income limit was raised from £4,000 to £5,500 and the result was that most local authorities received almost double the number of loan applications and had to stop sanctioning. It is extraordinary how many people qualified when the income limit was raised to £5,500 and this was the cause of the scarcity of money. I welcome the substantial increase in the amount allocated this year for local authority loans.

I am very worried about the unemployment situation. particularly among the young, and I am hoping that the measures taken in the budget will help to provide extra jobs and cut down the number of redundancies. It is dangerous for any country to have a large number of well-educated young people who are unemployed. When I was a boy the unemployed were uneducated and it was easy enough to satisfy them, but most of the young unemployed today possess their leaving certificates. Their brains will not be left idle simply because they do not have employment, but their only interest will be in living on the dole. They will use their brains in the wrong direction. Every effort has been made in this budget and I hope it will provide the required results of more employment for young people. The most important job this budget does is to look after our young people. There has been a lot of criticism of our young people but I often meet them at youth conferences and then ask questions relevant to the economy. We have never had better young people and when they study the programmes of the parties and their records coming up to the election they will make their judgment in a reasonable fashion. When I spoke to young people in Donegal I did not say that the economy was in tip-top shape but I told them that they had a choice between the collective responsibility Government of Fianna Fáil and the Coalition who have entirely different views on certain policies. The young people will take that into account at a general election.

Whether we win, lose or draw, I am glad that we introduced an honest, straight forward, harsh budget. This budget shows concern for the less well-off. It takes from the haves and gives to the have-nots. Nothing is free, so that has to be done. This budget made a decent effort to do that. The price increases have hit everybody, especially the price of petrol. People in the city have a bus service, but a person living in County Galway who has to travel 30 miles to the city to work must have a car. It is not a luxury anymore. However, these increases had to be made in order to get the money to run the country. If the Opposition can point out any method other than taxation by which to raise money let them tell us, but I believe they have no answer to it. In this budget in what is supposed to be an election year the Government have proved their honesty. The press have highlighted the increases but in the long run the second reaction to this budget will be more favourable.

An Leas-Cheann Comhairle

The Deputy has five minutes.

Mr. Callanan

I will not take it. Something that disgusted me about the Dáil before the time control was introduced was people speaking for hours. I saw a speaker here, when I was in Opposition, starting to speak at 4.30 p.m. and he spoke right up until the Dáil adjourned at 10.30 p.m. and he was still going strong. The same Deputy started the next day and it was 9 p.m. before I got in. On both sides of the House the practice was that one speaker would be sitting in and when he went out another Deputy would come in and repeat exactly what he had said, but he could not be accused of repetion because he had not been there to hear the first speaker. I never did that. One should say what he has to say in as few words as possible. No matter what I would have to say I would find it hard enough to remain talking for over an hour. I imagine I would become boring and naturally when one feels that one is a bore one should sit down.

Mr. T.J. Fitzpatrick

(Cavan-Monaghan): The Deputy sat in the House with a long-distance runner on one occasion who ran for seven hours, although he left in a terrible hurry another time.

Mr. Callanan

I know the man the Deputy is referring to but, I referred to people on both sides of the House. When I came here there were a lot of long-distance runners.

As time goes on, probably into next May, this budget will be more appreciated. If we have been accused of robbing the rich to help the poor I do not mind because I have a socialist outlook. The budget did its best under very severe circumstances when we had come through a very big recession. I hope that 1981 will see a turning in the economy and an upturn in employment as a result of the budget.

Mr. Horgan

Until the last two minutes of Deputy Callanan's speech I reflected on the thought that if he lived in almost any other constituency he would probably be speaking from these benches. The last couple of minutes of his speech in which he invited us to consider the Taoiseach, Deputy Haughey, in the robes of Robin Hood was almost too much to bear. Those robes would not sit lightly on the Taoiseach's shoulders and the garments that he wears under them are the garments that he has always worn, the mohair suit. Deputy Callanan spoke of the need to rob the rich — and to look after the poor——

Mr. Callanan

I did not use the word "rob".

Mr. Horgan

To take from the rich. If the rich resent giving, it is another matter, but they rarely do. But if we are to take from the rich — and that is not the entire philosophy of this party, although it is a reasonable proportion of it — all I can say is that the effects of this budget on the rich people in our society have been very marginal indeed.

In relation to this real, presumed or hoped for impact on the economy as a whole, this comes across as a very tired budget from a very tired Government. The Government might have been in power for 40 years it shows so little imagination and so little willingness to tackle the problems they have created and the problems that have been created outside. If we look at the parameters of our times and the parameters of the crisis we are facing — and we can barely avoid that as it is staring us in the face — unemployment has risen by a quarter in the last year to its highest level since the thirties. Every day there are further reports of lay-offs and redundancies and unemployment is now forecast to rise to between 135,000 and 160,000 over the coming year. Industrial output has fallen in the last year and according to the last figures we have for September 1980 was down by over 10 per cent on 1979. Farm incomes are estimated to have fallen in real terms by 25 per cent in the last year.

The Minister and the Government have done what they can in the budget but this has obviously not satisfied the farmers. It is doubtful if anything they can get from Brussels will subtract to any degree from the level of dissatisfaction they feel. The effects of the fall last year have been to some degree cushioned by massive de-stocking so that the outlook for next year, with a greatly reduced herd, is even worse. We have only to look at the objective results of that and the closures affecting the meat industry, which should be one of our most buoyant and vital industries, to see how wrong the whole equation has gone.

Prices have risen by over 18 per cent in the last year. This morning's forecast, which I heard on the radio, is that inflation will be about 13½ per cent in the current year. I suppose we are expected to take that as good news. It is a sign of how very badly things have been going that an inflation rate of 13½ per cent is expected to be greeted with hurrahs and cheers as if the horse you had put your money on had won the Grand National. I suspect, if there is a fall in the inflation rate, that it may be only a temporary one and that the actions of the Government not only in this budget but in the last few budgets have put us inexorably on the road to a situation in which our inflation may reach Israeli-style levels. I do not wish that on the Irish people but it is not I who have done that. The Government by their actions are responsible for that.

The degree to which the budget any longer does what people traditionally expected it to do is questionable. If we were honest about it we would admit that the budget represents just one day in the year when a number of taxes are imposed and the Government make a statement about financial policy. It is not, as it used to be, a housekeeping session for the year. It is not, as it used to be, a day in which the auditors were called in to examine the books for the preceding year, the projections for the forthcoming year and give their judgment on them.

It is not what it used to be for several reasons. One reason is instalment budgeting, which is taking place in the public sector, notably, over the whole 12 month period of each year. There is the rise in prices in public services. The action of the Government in permitting price rises in other areas have a greater cumulative effect, taken over the whole year in some cases, on public revenues and public expenditures than any individual taxation item in the budget. Another reason why budget days are not what they used to be is that just as political power is becoming increasingly concentrated in the hands of the Cabinet — this is almost inevitable given our system, to some degree — so also the power that comes from information has fled from the Dáil, if it ever resided here to any great extent.

All deputies, whether they come from the Government backbenches, like Deputy Callanan, or the Opposition front-benches, like Deputy Boland and I, come into the House to examine a budget. When we look at any budget we look at it with all the resources at our command, The resources at our command are what we have between our two ears and one-third of a clerk typist. At the same time there is a proliferation of expertise in other bodies outside the House. The trade unions — they could spend their money in no better way — have their research departments. The employers and bankers have their research departments. The NESC hire economists by the new time to tell us what should be done and what cannot be done to help them make their recommendations to the Government. There is this extraordinary contrast between the enthusiastic amateurs in the House and the hard-bitten professionals outside it, those who have access to information and projections — Government Ministers, have access to the projections and facts in Government Departments — which are denied to us. We end up in a situation, so far as power is concerned, in which the people outside the House have power over many things and responsibility for nothing and those inside the House have power over very few things and responsibility for everything.

It is time we looked seriously at the structure of the way in which we present and discuss our budgets. I am in favour of the creation of an economic policy committee of the Dáil and of a social policy committee of the Dáil along the lines of the committee, set up with some considerable success, to handle the affairs of the semi-State companies, so that Members of the House will not be confined to what lies between their ears and the services of one-third of a clerk typist when it comes to evaluating the economic and social strategy of this or any Government. I do not anticipate that committees of this kind will always be unanimous because that would presuppose a consensus model which, by definition, our Government and parliamentary system excludes, except on certain occasions and on certain policies. It would, however, bring a focus on economic, social and budgetary policies back into the House where it belongs and it would bring expertise into the House and put it at the service of all Members of the House, regardless of whether or not they are in the Government.

I believe such a committee should have the power to summon not only Ministers but senior civil servants as well to tease out the implications of budgetary and social strategy. There is a long standing theory that the civil service is neutral — it is in a sense — but sociologically it is inconceivable that any large permanent body of people, many of whom are professionals, highly skilled, highly trained and highly knowledgeable, should not develop their own modalities of ways of doing things, their response to problems, their preferred options, which they will suggest to Ministers in contexts which make Ministers believe that they have choices whereas in fact they are funnelled inexorably towards the preferred choices of the administrative structure.

I am not making any allegation of a party political kind because I do not believe that is the point. I believe that, just as the political aspect of the nature of our administrative system must be taken cognisance of and that we should not treat our parliament in a total-like manner and assume that simply because we have representative democracy and vote here to elect a Taoiseach or to unseat one, that we have control over all institutions and over the budgetary and economic policies, which are largely farmed in the inner workings of these institutions.

In relation to the budget in particular I believe that a good case could be made for it if it was introduced in 1978. I believe it would still be open to substantial criticism even in 1978 but it was not introduced then. It was introduced in 1981. Worse than that, it cannot even begin to put right the problem created by the budgets of 1978, 1979 and 1980.

More seriously, it is being introduced at a time in which there is increasing scepticism about the figures on which the Government are basing their budgetary protections. Governments will always choose the figures most suitable to themselves. That goes without saying, and it is quite legitimate. Up to now there has been at least an assumption that the figures the Government choose will bear some kind of relation to what actually happens at the end of the day.

It is always reasonable to claim an over-shoot here, or exceptional circumstances, or that the Arabs are at it again, or whatever. The figures with which we have been presented lack even that basic credibility. Take the Estimates, for example. The level of indebtedness by local authorities, over and above what has been given to them in this Book of Estimates, will probably amount to a minimum of £100 million in the coming year. If that £100 million is not in the Estimates, it has to be added on to the borrowing. That is the only option if we are not to increase taxation further.

I had a miniature example of something similar in the Department run by the Minister of whom I am the counterpart on these benches, the Minister for Education. In response to a question of mine the other day he announced a 10 per cent increase in the new fees for secondary schools. It may be the case that this grant will not all fall due in the current year, but I somewhat doubt that. When I asked him where this £1½ million was to be found in the Estimates, all he would say was that the Government would meet all the Claims on the Estimate for the Department of Education. The subhead we were talking about had actually been increased to a very miserly degree in relation to last year. As far as I know, it was paid at last year's level. There is a Supplementary Estimate of £1½ million for the Department of Education before we start. God knows what will happen in the school transport service and all the other areas in which cuts have been made beyond the limits of what can be believed or, I suspect, what can be done.

When we look at the figures and the projections for the borrowing requirement, the same credibility explosion occurs. Last year the projection was for £896 million foreign borrowing requirement. The actual foreign borrowing was £1,217 million, that is, an increase of 30 per cent from the beginning of the year to the end. We are supposed to be borrowing £1,296 million this year. This is the Minister's projection as of January 28. I do not know what to say because, if the over-shoot this year is to be 30 per cent, in other words at the same rate as it was last year, we will be paying a terrible price for the time we are buying.

I do not know if people generally realise exactly how big that price is. If they do not, I suspect the reason is that they have not been asked to pay their full whack of it yet. They are becoming aware slowly of the fact that almost 70p of every £1 they pay, willingly or unwillingly, in income tax goes towards our foreign debt servicing. They are not yet aware of the real costs. The real costs are evident and will be much more evident when the services are cut.

People always have a residual objection to paying income tax, or taxation of any kind, but they will continue to pay taxation, at least grudgingly, for as long as they are getting services. When it becomes increasingly evident that the money they are paying, the money they have earned by the sweat of their brow, is going in the shortest possible space of time, via the Exchequer, into the vaults of some German, or Dutch, or Saudi-Arabian bank, they will not be just displeased. They will become angry, aggrieved and resentful. This may provoke a kind of social situation in which the Government will be powerless to prevent the effects of any cuts which have to be made from falling most heavily on those with the least ability to bear them.

I have already referred to inflation. It is a sad day when we are expected to run up flags for a projected inflation rate of 13½ per cent. I should like to turn very briefly to the question of the social welfare increases. By and large I welcome those increases. The Government have been meaner than they might have been. In a number of crucial categories very small extensions of the scheme could have been made at comparatively small expense in order to ensure greater equity.

For example, the greater increase in social welfare is designed for long-term social welfare recipients. Long-term social welfare recipients do not include people on unemployment assistance because of the fiction — and unfortunately for many people it is a fiction — that people on unemployment assistance are shortly about to get a job. We all know what happens. People lose their jobs. They are made redundant. They get their redundancy payment. They get their unemployment benefit. They run out of stamps and they go on unemployment assistance. Increasingly these days, if they are over 40 or 45 years of age when they are first made redundant, they will be on unemployment assistance to the bitter end of their days. They could be on unemployment assistance for a decade and yet the Government regard them as not being long-term social welfare recipients.

Another area of importance is in relation to the extension of the telephone facility to certain categories of disabled people. Members of the House will be aware that there are two forms of disability payments. There is the disability pension and there is the disabled persons maintenance allowance. One is slightly higher than the other. People who have the option generally opt for the one which gives them the extra £1 or £1.50 a week. These people have been excluded from the operation of the scheme because they opted, as was their right, for one scheme rather than another.

I appeal to the Minister for Social Welfare, when he is taking the necessary administrative and perhaps legal steps, to do something about this and, at the very least, not to create the invidious class distinction between the unfortunate physically handicapped people in our society which this provision creates. It is a small price to pay in that department.

I shall now turn to the question of taxation. Last year an elaborate piece of juggling was done in an attempt to persuade PAYE workers that Christmas had come and life would never be so good again. At the end of the year we saw what happened. The harvest of taxation reached by the Government's mammoth inflation rate had removed in some cases most, in other cases all and in other cases more than the amount of the benefit they thought they were receiving at the beginning of the year. It is undeniable that this budget does not attempt to pull that kind of confidence trick but there are many confidence tricks hidden in it here and there.

We are told that the concession to PAYE workers will amount to £60 million this year and to more in a full year. I query the use of the word "concession". If income tax allowances were indexed and the kind of adjustments made that the Government are making at present that would be a concession. In a situation in which allowances are not indexed, any Government rearrangement of the taxation system which does not result in the PAYE category as a whole paying less rather than more is not a concession but an imposition. For a start, we know the history of the £40 million which is due to the increase of another £200 in the special allowance to PAYE workers. The history of that is that it was wrung out of an unwilling Government by the trade union movement on the eve of a national understanding. Not even the Minister for Finance expected us to believe him when he came into the House portraying that as a concession.

It is indisputable that the extra revenue which will be generated this year in the PAYE sector for the Government over and above the concessions or allowances which are being made in the budget will be between £140 and £150 million. Therefore, the PAYE sector this year are between £140 and £150 million worse off. This brings me back to Deputy Callanan's contention that one must take from the rich to give to the poor and to the Government's contention that in the budget they are doing precisely that. The genesis of the whole PAYE revolt over the last few years has been the belief that the Government are not taking from the rich to give to the poor but are taking from the slightly better off to give to the worse off. Transfers are taking place in the economy but they are leaving the upper reaches of the economy virtually unscathed. Speculators, people who make quick capital gains and others have had their situation dramatically improved over the last four years by a whole series of legislative and administrative arrangements brought in by the Government. The load must be carried by someone and it is being transferred from their broad shoulders — they were not carrying much to begin with — to the ever narrowing band of people whose incomes are subject to scrutiny by the tax authorities, who have no access to special reliefs, who do not have the capital to speculate and make gains and who are becoming more and more disturbed by, as they see it, the disproportionate burden they are asked to bear.

If the Government in their search for an incomes policy, and all Governments need incomes policies, thought seriously about the situation they would spend less time talking about the need for moderation and restraint on the part of workers and more time examining their own conscience to see how many immoderate and unrestrained claims — I have yet to see a claim that goes beyond the rate of inflation — are due to the growing perception among wage earners that the tax system is unjust and inequitable. If people see the system as unfair their willingness to pay towards its maintenance will be correspondingly reduced and that is unmistakably what has happened over the last three or four years.

The irony is that they can be backed up in their belief that the system is unfair by no less an authority than the Central Bank. In their winter report for 1980 they have more imagination and progressive thinking in relation to the tax system in it than the Government have been able to produce in the budget. If ever there was an indictment of a Government for lack of imagination and willingness to do anything it is in that statement. The Commission on Taxation are sitting but one would have thought that some of the things in the Central Bank report are so obvious and have been pointed out so many times that the Government would not have to wait for the commission to report to them to do something about the situation. According to Joseph O'Malley in the Sunday Independent last week the commission are divided and are unlikely to produce an agreed report for a considerable time. Does that mean we will have to wait for a considerable time for any greater degree of equity in the tax system? I sincerely hope not.

In page 45 of their report the Central Bank state:

The width of the tax base also has implications for equity. A narrow tax base, in particular with respect to income tax, has led to perceived horizontal inequity and therefore tax resistance and conflict between different groups in society. Only if the burden of taxation is seen to be spread more equally will these problems abate.

The language is somewhat mandarin but the sentiment is unmistakable. There is inequity and the Government are responsible for it. It is that inequity, more than anything else, that makes the Government's attempts at an incomes policy so laughable. The sad fact is that even when workers succeed in getting claims which will compensate them for the worst ravages of inflation in money terms, they discover that their standard of living, the quality of their lives and that of their families is not as good as it was because they have to dig deeper and deeper into their pockets for goods and services formerly provided by the public sector but which are not being provided by them any more because the Government are cutting back on the public service. This is especially true in education and in all areas relating to local authority services. It will become an increasing feature of life in the years ahead.

The Central Bank, the new found haven of radicalism, points out in relation to interest on personal borrowings for tax purposes:

It is arguable, however, whether any interest on personal borrowings, with the exception of interest on borrowings to finance the acquisition of assets, —

that would be house mortgages, for example —

should be an allowable expense for tax purposes. Tax concessions on such loan interest amount, in effect, to a subsidy on personal borrowings and tend to divert savings from the financing of investment. It is difficult to see the justification for such a subsidy, which is likely to lead to a misallocation of resources and a loss of efficiency.

Of course the other aspect of this form of tax relief is that the goods on which these personal borrowings are spent are almost universally expensive imported consumer goods. The more expensive they are the more interest you pay and the more relief you get because the relief is not at the standard rate of tax, which would be an interim step but at the marginal rate of tax.

Yesterday the Minister for Finance told me that in 1981 the cost to the Exchequer of the income tax relief to the buyers of Volvos, Mercedes, yachts, and God know's what will be approximately £12 million. I believe that that £12 million should not be borne by the Exchequer in the majority of cases. The bitter truth of it is that it is the buyers of these expensive items who will be in a position to claim relief against their income tax whereas the ordinary people out in Artane, Howth or wherever, who has mortgaged themselves up to the back teeth with hire purchase agreements on furniture, cookers, fridges and things like that which are essential, either will not be earning enough to make the relief worth anything to them or simply will not know sufficient about the way the financial system works to be able to take advantage of it. Therefore that relief is extremely regressive.

Again the Central Bank isolates one area in respect of which we in the Labour Party have been roaring and screaming about the need for more taxation in recent years. In their report or Quarterly Bulletin for Winter 1980 they say:

The banks should be subject to the same taxation system as other non-manufacturing enterprises.

(v) Differences beween the standard rate of taxation on corporation profits and the levels of taxation paid by banks have been due to the various taxation-related lending schemes, such as, leasing, Section 84 loans and preference share financing. If these were abolished it is tentatively estimated that in a full year the banks' liability to taxation in the state would increase by approximately £40 million — a figure which should be regarded as an order of magnitude.

Those are not the words of some wild, left-wing orator standing on a soap box throwing his arms around at the corner of Abbey Street. Those are the words of the economic commentary of the Central Bank. And if the economic commentary of the Central Bank suggests that the banks at least should contribute another £40 million to taxation revenue, if they were taxed in the same way as other business, then it is something at which the Government should be looking very seriously indeed. If they are not looking at it, then they need to examine their consciences, and if they will not examime their conscience we will do it for them.

I will not talk about the wealth tax to any great degree because it has become a hardy annual, especially from these benches. More is the pity that it has become a hardy annual because every year that passes the amount of lost revenue from that tax increases. The same is true of the capital gains tax, whose effect has been reduced by 70 per cent by the present Government. I daresay that when one adds together the capital gains tax and the wealth tax alone, since the time the first was emasculated and the second suspended, and if one divided the 84 Fianna Fail TD's into the amount of money that has been foregone by the Exchequer because of the abolition or emasculation of these taxes, one would come to the regretful conclusion that over the four years in question each of those Fianna Fáil Deputies, and each of their votes in the lobby to elect the Taoiseach of their choice, has cost this country £3 million or £4 million. I only hope that when the time comes the country will come to the conclusion that it has not been worth it.

The overall reaction to this budget has been bad. It will not get better, as some Government speakers seem to hope, and it will not get better because people, while they see the financial changes that have been made particularly in relation to social welfare, do not believe that the leopard changes its spots. They do not see this as any long-term change of heart on the Fianna Fáil side. Even within Fianna Fáil, despite the public trumpetings and blowings, there is deep resentment about some budgetary provisions.

I was in a pub down the country only last Thursday. I was recognised when I went in for a drink. A man near me started to talk about politics. After a few phrases he said he was in Fianna Fáil. I said: "Fair enough. What do you think of the budget?" He said he had nothing to say about the budget. A few minutes later, of course, he was talking quite freely about the budget, and his first comment was: "They gave too much to the idle." He was a supporter of the Government. After that he said: "They gave too much to the farmers" and, after that, he said they did not give enough to him. It went on to the point — and he was not being pressed by me on this — at which he expressed himself in disagreement with virtually every single plank of the Government's economic policy. At the end of it I said: "Look, you disagree with almost every aspect of the Government's economic policy. Why do you go on voting for them?" He said: "Ah, Well, I vote for them for other reasons". Now, it is difficult to argue with that, but I am hoping that when the time comes for the next election these mythical legendary or other reasons, whatever they are, will not weigh as heavily in people's hearts or pockets as will a realisation of what this Government have done over the last four years and of what more they will do if they are permitted to come back for another four years.

We are often accused on these benches of being all spenders and no taxers. I have suggested four major headings on which a start could be made in increasing public revenues through taxation. I would emphasise that it is a start only, because while wealth must be created in society wealth must also be taxed in society, and ownership has to be shared in society. Until that is done there will be no perception of any equity in the taxation system and Governments of any persuasion and of any colour who fail to take these steps will pay the price at the polls.

At the end of the Taoiseach's speech the leader of the Labour Party and myself commented here on the glum looks ranged in rows behind the Taoiseach. I likened them to Kamikaze pilots waiting to go out on a mission. I do not think the situation has changed over the past week. It has become fashionable on these occasions to call for a general election immediately so that the people will have an opportunity to pass judgment on the Government of the day and not just on their budgets but on the budgets of their predecessors. Let me say that I do not much care when the election comes because I know it will come and I know that after it is over Fianna Fáil will not be in the majority in this House.

Mr. Noonan

I am delighted to have an opportunity of making a few comments on this budget. I should like, first, to congratulate the Minister for Finance on his appointment. I have been listening to Deputy Horgan for the past few minutes. I want to say to him, and indeed to all the people across in those benches, that when the general election does come I have no doubt but that once again Fianna Fáil Deputies will be sitting on this side of the House. Indeed, listening to Opposition speakers in this Debate over the past couple of days it must be said they have advanced no alternative policies, none whatsoever. I am confident that when the Taoiseach does call a general election once again the people will give Fianna Fáil the mandate of carrying on the task of progress and expansion generally.

We have heard from the opposite benches that public expenditure has been cut back. I would like to ask them to outline clearly and concisely where the cutting back has taken place. In all aspects of the capital budget there have been, even in this year of financial restraint, widespread increases in expenditure on all fronts, in education, in agriculture, in grants to local authorities and, more particularly, to the social welfare recipients. Vast increases have continued to take place and indeed when the occasion arises during the year, as happened last year, increases will be implemented as necessary. For that reason I am confident that, when our Taoiseach does call a general election, once again this party will be given the mandate because there is no alternative.

Listening to the comments of my constituents over the past seven or eight days I found that the reaction to this budget was very favourable. This party has consistently put to the people the problems which exist because of world wide recession and the people, as always, will accept the constraints which were necessary in this budget. In outlining his budget the Minister stated that he must have regard to the social as well as the economic aspirations and to our capacity to pursue those aspirations to make an effective impact in achieving progress and harmony within the community. He went on to say that at the best of times it was difficult to reconcile the expectations and needs of the different elements of society. That sums up the budget in its widest aspect. We must have regard to social as well as economic and financial aspirations. That is important in the society in which we live. In this year of severe constraints on financial expenditure the budget has expanded in all sectors.

I want to go on to the Minister's references to agriculture. Agriculture has gone through a difficult period during the two years 1979 and 1980. During the early seventies there was an unprecedented reflection in regard to farmers' incomes. The agricultural sector has benefited well from this budget but this is only part of the package. In so far as agriculture is concerned I am confident that the Minister for Agriculture will, in the very near future, announce some further packages of aid to boost one of our most important sectors, agriculture. The Government have viewed with serious concern the decline in farmers' incomes over the past couple of years. Through their package of aids at the end of last year and in this budget the Government have shown that they are committed to improving the lot of farmers who are the backbone of this nation. We realise the importance of agriculture, of building up the farm family, and of granting aids to enable young farmers particularly to make a good living from farming. The Government will continue to aid this important sector through the allocation of grants. The grants made last year towards the farm modernisation scheme is a further indication of the willingness of the Government to improve the lot of the Irish farmer as is the doubling of the rates of grant under the disadvantaged areas scheme and the inclusion of other areas in it, brought about by the good work of the Minister for Agriculture. We agree that enough is not being done but as I have already stated the Government are examining ways and means of helping farmers and will continue to do this in the months ahead. Like most European countries we have been hit very badly by this world recession.

The forthcoming review of EEC farm prices will provide an opportunity to compensate farmers for rising costs. There are constraints within the EEC arising from the limitations imposed on the budget, but the Government are determined to obtain the best possible deal for our farmers. From EEC reports I gather there are very good grounds for expecting that this year's price increases will be far more realistic than those of previous years. This is as it should be. Due to the very small increases in the price of agricultural goods received last year, farmers' incomes declined. I have no doubt that this year the improvements will be exceptional and that our farming community and those in the agricultural sector will enjoy once again the favourable conditions that prevailed prior to two years ago.

The Minister outlined the problems in disease eradication and its importance not only to the agricultural sector but to the nation as a whole. I am glad he decided to suspend the disease eradication levy because farmers are facing very exceptional difficulties at present and this bill is being met by the Exchequer at an estimated cost of well over £9 million. The Government will continue to review the position and will decide in the light of prevailing conditions whether the levy should be reimposed.

The Minister derated farms under £50 valuation and derated farms between £50 and £70 valuation by 50 per cent. This shows the importance the Government place on boosting agriculture. I hope ACOT will investigate the problem affecting agriculture in different counties and try to find ways of alleviating these problems. This organisation received a very substantial sum of money in the capital budget and they are doing a very good job. I know they will continue to do this work in an excellent manner in the years ahead.

An Foras Talúntais are being asked to experiment with new varieties of potatoes. The Minister provided £250,000 to assist the development of the seed potato industry and to alleviaté the present position. Developing the seed potato industry is very important in certain parts of this country and we hope there will be further expansion in this area in the very near future.

The Minister referred to the farm taxation problem. He said in the 1980 budget that farm income tax, rates on land and the resource tax were estimated to yield about £86 million and farm incomes had fallen by about 4 per cent in 1979. They have since fallen far below that figure and I am glad to note from the Minister's speech that farming organisations, officers of the Department and the Revenue Commissioners are looking for ways to simplify farm accounts. I have no doubt that this report will be made available shortly. This report will indicate where losses are made and show where improvements can be made. This is important.

In a recent speech the Minister for Agriculture referred to the improvements in farm incomes and said farmers could make further improvements by greater production and improved farming methods. This, side by side with the improvements announced in the budget, will go a long way to improve farmers' incomes and their standard of living, not alone this year but in the years ahead.

I am glad the Government saw fit to discontinue the resource tax. This tax, like rates on agricultural land, has to be paid without taking into consideration a farmer's ability to pay. For that reason it is unjust and the Government made a wise decision by discontinuing this tax and derating agricultural land under £50 valuation and derating by 50 per cent all land between £50 and £70 valuation. This is an indication of the Government's interest in boosting the development of agriculture, and more particularly, farmers' incomes.

Turning to improvements in the social welfare benefits, it is the policy of the Government and of this party down through the years to boost substantially the income of social welfare recipients and of the less well-off section of our community. Nobody denies that this is the right policy and should be continued. Improvements of 20 or 25 per cent were announced in the budget and this policy will continue. Nobody will deny social welfare recipients their just and fair increase. While taxation introduced on tobacco, spirits and petrol, will to a certain extent increase the cost of living, nevertheless it is on non-essential items. Therefore, the people will accept it, bearing in mind the benefit which will accrue to social welfare recipients and to income tax payers whose special PAYE allowance was increased from £400 to £600. Other concessions have also been given. We realise that these concessions must come from taxation and we all accept that indirect taxation is the only alternative. Direct taxation is not the proper method to improve the benefits which I have outlined.

The overall reaction to the budget was very fair. Members of the Opposition who have already contributed to the debate have been critical, but when you do criticise it is important to put forward alternative policies. They have not come up with alternative policies to put to the people in the forthcoming election whenever it comes. I am confident that as a result of this budget, which is one of progress and expansion in a year of considerable financial contraints, people once again will give a mandate to Fianna Fáil and to the Taoiseach to continue the policies of expansion in the economy.

Policies which the Government have implemented over the past two years are now bearing fruit. Indications are, according to the Taoiseach when he spoke on the budget last week, that there is an upturn in the economy. The base has been laid so that when the worldwide recession ends we will be in a position to expand the economy still further. Proposals were announced by the Government recently in the programme for financial investment, particularly in the areas of telephone expansion, the developing of industry, building of advance factories for industry and encouragement by the State to attract private investment in the development of the nation. It is important that people should be encouraged to aid financially the developments that are taking place by financial injection so that we will benefit from the improvements which will take place this year and in the years ahead.

I wish to refer to the areas of expansion which have taken place in the development of the health services and the amounts that are being made available in the capital budget for their benefit throughout the country. This year as in previous years the increases have been substantial and the improvements in the health services in regard to the free fuel vouchers, which have been increased again, are an indication of the Government's commitment to improve the lot of the less well-off section of the community. The Government, notwithstanding any comments from the Opposition, will continue this policy which is the right one in regard to helping and giving the necessary aids to the less well-off sections of the community.

The Minister also made reference to the poor international outlook and said it was both a challenge and a warning to our relatively small economy. He said that the Government were not prepared to let the economy drift in the prevailing international recession. He said that active support for investment development and employment remains at the centre of the Government's strategy. The present lull in economic activity elsewhere must be seen as an opportunity for a breakthrough in the development of the national economy. He further states that the investment plan aims at concentrating available resources on directly productive investment and supporting infrastructure. He concludes by saying that this would create the foundation for further and faster national growth when more buoyant economic conditions follow the expected upturn in world trade later in 1981.

That confirms what I have stated, that the Government in the last two years have been laying the foundation of the various infrastructures so that when there is an upturn in the economy we will benefit. That will happen because of the wise decisions and foundations laid by the Government. The 1981 Estimates for the Public Service make it clear that the Government intend to follow such policies. The Government will continue a policy of expansion and progress. Unlike Opposition speakers we are confident of facing the electorate to seek a further mandate and of the Government being returned. The people will give Fianna Fáil a further mandate to continue the progress for the good of the country.

Mr. Boland

I am rather loath to comment in detail on the contribution of Deputy Noonan but I could not help reflecting as I listened to him on the marked similarity between sections of his contributions and sections of the contributions made by Deputies who supported the Government in 1975 and 1976, a Government which I supported. I am a little afraid that it is rather pious and hopeful thinking on the part of Government Deputies in the present era and in modern society to expect that the general public will appreciate the constraints on Government and are prepared to realise that they must adopt a responsible approach. That has not been the trend in this or in other European countries in the last decade. I am afraid we have begun to see more and more the politics of greed and the politics of pressure groups. We have begun to see more and more in difficult economic times that people insist on using their muscle, their organised power, to wrest for themselves the best possible deal in worsening economic climates. From that point of view any Member, like Deputy Noonan, or my colleagues of the mid-seventies, who profess publicly their belief and confidence in the responsible attitude of the general public need to think again.

I do not think that last week's budget is the sort of one that will be received in the manner Deputy Noonan expects it will. I do not think a budget that did not appear to have any definite purpose will be accepted as one designed to stand the test of an election contest or as one designed to remedy ills in the public finances. The impression I have gained from the budget is that it has fallen between two stools. On the one hand it is endeavouring to create as favourable as possible a climate for a general election and, on the other hand, it endeavours in certain aspects to mend the Government's hand in the irresponsible approach to continued and deepening deficit budgeting in the last number of years. Deficit budgeting had been carried on since the mid-seventies but it has deepened and has begun to eat into current expenditure because of the amount of money needed to service the public debt. Deficit budgeting has been repeated successively since 1977 by Fianna Fáil and not, as Deputy Noonan said, over the last two years. Perhaps there are Fianna Fáil Members who would be inclined to or prefer to forget that their party has been in power since 1977. They got into power on promises made in that year. The policies, such as they were, have been enforced since 1977 by Governments under two successive Leaders elected in 1977 by the one public. It is not good enough for certain sections in the Government party to represent that there was a mini-general election approximately two years ago on the occasion of the change in leadership in Fianna Fáil.

Surely by 1981 the purpose of the Government should have been three-fold, to combat unemployment, to combat and reduce inflation and to work to bring about a progressive reduction in the balance of payments. I do not think the budget will succeed to any marked degree in any of those areas. I would have thought that all the exhortations made to the Government by the differing economic experts, all of whom were in agreement that there was a necessity for such an approach in this difficult year, would have convinced the Cabinet that there should be a central theme, not referred to in a pious way, throughout the budget speech.

It appears that there had been an expectation that the aspects that the Government hoped would be sugar-coated ones in their budget would lead to their re-election. It appears that there was an expectation that the rather minimal personal taxation allowances, together with the farm package augmented by the Brussels announcement, the upturn in certain aspects of the construction industry and the social welfare increases, would spell election success. Those items were delivered irrespective of the needs or constraints the condition of the economy demanded. People are more discerning and more demanding now. The general public, particularly the PAYE sector, quickly established that the tax benefits were not largely illusory but almost entirely illusory. Those in the PAYE sector are able to work out, with the help of media commentators and others, whether they are better off in real terms as a result of the tax allowance adjustments. It is obvious to most people in the PAYE sector that the increases in the tax allowances offset against the increased payments which they will have to make in their PRSI moneys, offset by the increase in the cost of living through the impost of the direct taxes announced in the budget, will mean in real terms that they will probably be net losers.

Deputy Horgan referred this morning to the fact that the Government in net terms expect to get, he estimated, £140 million to £150 million extra in income tax from the PAYE sector. That means that when not even the most optimistic of Government supporters can expect a large increase in the workforce, the same number of people at work are expected to pay £140 million extra this year. They are not Deputy Horgan's figures, they are not mine; they are not Opposition figures. They are the Government's own figures. The same number of people who are working now it is hoped will still be in employment in a year's time and on the Government's own figures they will have paid £140 million extra. Against that we have to balance whether the rate of inflation will be and whatever increase of earnings they will have gleaned by virtue of the national understanding. Most PAYE workers have already established for themselves that at best they are at a standstill and most likely will turn out to be net losers through claiming additional allowances by the tax allowance adjustment and on the other hand paying more in PRSI payments and indirect taxation on what have become commonly and rather unfairly referred to as "the old reliables" and in seeing the CPI increases as they work down over the 12 months — the effect of the increases in petrol, diesel, telephone and postal charges. All of these items individually are dismissed as being minimal but collectively they will have a marked effect on the CPI, the rate of inflation and people's living standards in real terms.

PAYE workers are also beginning to realise that in times of continually high inflation, failure to index the tax balance to take account of that inflation means that, irrespective of whatever their salary or wage increases may be, they are the net losers, and in an economy where, as Deputy Horgan pointed out, the tax base is already too narrow and too few contributors are expected to carry too many non-contributors, those contributing, if adjustments are not made in a truthful and realistic way on an annual basis, will find themselves progressively worse off. The PAYE worker is probably the single most important component in the electoral college that the Government would hope to persuade whenever the general election comes about. I do not think that they can be influenced by short-term measures such as telling them about their special tax allowance, negotiated under the national understanding, of an additional £200, the slight change in the 35 per cent rate, the upturn in the construction industry or the social welfare increases. Very quickly they work out for themselves that these gains are illusory and they make up their minds now on a Government's performance, not on the basis of a single-day, three-ring circus budget once a year. They make up their minds over a period of time, probably half way through the lifetime of a Government and their perceptions after that are influenced only minimally. I recall Government supporters in 1975 and 1976 making the sort of speech I heard Deputy Noonan, quite genuinely I am sure, make in the last hour, but I do not think that those speeches matter a whit any more. The electorate in 1975 and 1976 were waiting for the general election whenever it came about. They were lying in ambush for our Government and eventually the trap was sprung and the election was called.

The same thing applies now in relation to this Government and any other government faced with the hard economic decisions that have been put before governments in the late seventies in the western world and governments who take the easy way out by deferring real options, which has been the hallmark of the Fianna Fáil Government since 1977. I do not think that anything they are going to do now will change the inevitable outcome. People see that the tax bands have not been changed and that their living standards are likely to fall as a result of Government policy this year. To compound that, the Government's stated intention in the Book of Estimates of allowing only a 3 per cent rise in the spending area is indefensible and it will mean that by the middle of the year the public services will have to be cut back to a savage extent and there will be a fall back in the level of services provided by the health boards, local authorities and public departments. They will recover, as they usually do, when central Government professes now to implement these strictures which actually they cannot put into force, and by the year end we all know that there will be either a further series of massive Supplementary Estimates as there were at the end of 1980 or, if there has been an election in the interim there may be, if a decision is made by whatever Government are there to right the public finances at the outset after the general election, a mini-budget. There is no way, on the Book of Estimates, that especially the health boards and the local authorities can survive during 1981 without a massive cutback in the level of their services and without bringing about unemployment. The prospect of seeing the public authorities reducing their unemployment ratio substantially is not one that any Government could sustain now. Extra moneys will have to be made available to the local authorities, especially to the health boards and the social agencies. To enable that to happen there will have to be either Supplementary Estimates or a second budget at the fall of the year. An economist is not required any longer to work out that sort of thing. The general public now have the perception of the way in which this budget has been approached.

There was no real attempt to tackle the deepening and fearsome problem of unemployment combined with inflation and the balance of payments problem. No imagination or innovation was displayed. Instead we saw a further conceding by the Government to the politics of pressure that I referred to at the outset. It reminds me of the efforts of successive Ministers for Finance in recent years attempting to shore up the breaches in the system. Give a little bit here, a little bit of cement there and bolster that up there. Keep it going for another year and perhaps the oil will come on stream, or perhaps there will be an upturn in the world economy from which we can benefit on a spin-off basis, or perhaps the British will get fed up with the fact that they cannot sell their exports, perhaps they will readjust sterling, perhaps they will get into the EMS. Perhaps, perhaps but let us wait till next year. Let us not take the unpopular corrective action.

Possibly Governments are not entirely the single party to blame any longer in this attitude. The employers, trade unions and Governments all bear a responsibility for bringing about this climate whereby Government political parties are so susceptible to pressure and so afraid to become even temporarily unpopular that they are unwilling to do what they know is right in the medium and long-term for the economy. The pressure groups are now so powerful that they will bring about the unpopularity of that party and the consequent electoral danger of demise or defeat. Where unemployment is at 125,000, estimated to be 150,000 and some of the forecasters estimate an Irish economy within several years with 200,000 on the live register, there is a responsibility not just on Government but on the unions and employers.

Everyone in employment must contribute in additional taxation to provide the welfare payments for the unemployed. Trade union and employer representatives have a responsibility to ensure that the economy is put back on a sounder footing on behalf not only of their members who are employed in industry or providing employment but also on behalf of those who have no jobs, have never yet had jobs, those who are still at school and who are the potential work force. No longer have the unions, the employers or the Government the right to mortgage the future job prospects of children still at school. To some extent that is what has happened in the sort of deficit budgeting and Government financing we have had for a number of years, a situation brought about mainly by the Government because they have the ultimate decision and responsibility, but also brought about by social pressures and forces of other contributory bodies. The responsibility to restore the economy to a sounder basis rests now also with all the representative groups in society.

In the middle of 1977 the then outgoing Taoiseach told a group of us that — I think it was in the London Summit — EEC Heads of State had spent a long part of the private meeting of the Nine members, as they were then, discussing whether democracy could stand the test of the next 15 years in Europe. Not to my great surprise the Nine were rather pessimistic as to how the European institutions and governments would stand the test of the pressures, continued ravages of inflation, increased oil prices, energy crises, terrorist attacks and especially failure to provide employment particularly for young people. Those were the areas about which they were worried and expressed pessimism. Of all the European countries ours has the highest proportion of young people, of people looking for employment. When we talk of the necessary steps being taken to correct Government attitudes to budgetary decisions and continuing budget deficits we are really talking about how well democracy here will stand the test.

I have spoken here before about the fact that if we continue as Parliamentarians to turn away from real issues, continue coming here and surrounding ourselves in a cocoon of cotton wool we could have a situation after some years where this Chamber would not still be the democratically elected Parliament. I do not want to see that and I do not think that very many here want to see it. We all have an obligation to realise that the time has come for the hard options and that it will not be easy to survive in the years ahead.

Perhaps there is an obligation on political parties to do the right thing even if it spells the likelihood of their electoral defeat in the next general election whenever it may be. The prospects now seem to be of an Irish economy with a work force of about the same number, an increasing number coming on the potential work force, a figure on the live register of unemployed of perhaps 150,000 or 200,000 or even 250,000. They talk in Britain now of up to 3 million of the work force unemployed within the next 18 months. Ten years ago who would have thought that would be possible in Britain without there being revolution? Yet it is being talked of now. The commentators now talk of about 200,000 unemployed in the Twenty-Six Counties. Whatever about that number of unemployed, those in employment must provide through taxation direct or indirect social benefits at whatever level they are for that number.

Say that by 1985 we have 200,000 unemployed. Young people who became school-leavers in the mid-seventies and never succeeded in getting employment would be almost 30 by 1985. We must ask ourselves how much longer can political parties expect people who have reached 30 and presumably would have had the opportunity of voting in three or four general elections, three local elections, several referenda and so on, to respect democracy, respect democratic institutions and continue to vote for Fianna Fáil, Fine Gael, Labour or any other party that might register under the democratic system? Perhaps it would be a little unreasonable to expect somebody who has been 15 years unemployed since he left school to continue to vote for a party which he could fairly say had together with its parliamentary counterparts, been failing in the system.

We could have a situation, which seems quite likely in the next five years, in which Irish currency would suffer a series of devaluations as a result of our commitments abroad and continued deficit budgeting in the latter part of the seventies. We could see a situation that might in the long-term save democracy, where budgetary policy might be decided not by the Government here but by the International Monetary Fund. Unpalatable as that would be it might be the only way that would enable democracy to stand the test of time referred to in the discussions of 1977.

This is a very gloomy picture which it is no great joy for any of us in public life to have to paint but it is not an improbable picture given that over a number of years we have not faced the hard options. Deputy Noonan could claim, for instance, that Opposition speakers criticise without putting forward concrete alternatives. To some extent that is true. To some extent also the Deputy knows the political folly of a principal Opposition party at any reasonable time before an election outlining in detail their electoral policy because the easier parts to implement will be taken and very quickly the Government will be wearing the Opposition's clothes which is not an attractive prospect for an Opposition's hope of success. He is correct to some extent; there is need for more constructive speeches if the scenario is as black as I have suggested, and I fear it is. For instance, if a few of the more constructive things could be explored again, things that have been explored over the past few years, why cannot we look at the hard options, and if money requires to be spent in the millions that we now deal in to make even the slightest adjustment in public finances, why have we not begun to encourage early retirement so as to provide further opportunities. If we cannot expand the labour market we should at least try to free places by encouraging people to accept early retirement. Why have we not begun to make it more unpalatable and more unpopular for people to have more than one job? How many people have more than one job and how many have no job? To what extent have we endeavoured to bring about a shorter working week? In that respect the trade unions should examine their consciences as well. If there is the prospect of 200,000 people unemployed, surely the representatives of those in employment should say to them that rather than having more material benefits for themselves perhaps they should accept a standstill in their own standard of living in order to provide jobs for their colleagues who are out of work? Instead of additional money being offered to the labour force, they might be offered additional time off.

Of course there is need for a deliberate, conscious Government policy of intensive adult education and retraining so that people in early retirement or those who have agreed to participate in a shorter working week may find some meaningful tasks to keep them occupied during the additional leisure time available to them. Those are not unknown concepts. They have been voiced in this House by me and others and they have also been put forward by various bodies within the EEC. They are options — perhaps not palatable ones — that would free places in the market.

Could there not have been a provision in the budget on the lines of the suggestion put forward each year by me that people under 21 years should be exempt from paying PRSI and their employers should be similarly exempt from making contributions in respect of them? That would be a positive encouragement by the Government in respect of youth employment. We must face the fact that PRSI has become a considerable burden on employers. It is true that between the employer's contribution and the employee's contribution approximately £1 in every £7 or £8 of the wage paid to the employee is paid back to the State in PRSI. For many of the benefits an unemployed person gets, he and his employer have paid handsomely into the scheme, as has the State. It would encourage employers to take on young people and to train them if they were relieved of paying PRSI. That suggestion has been put forward here since 1977 but it has not been acted upon.

Because of personal circumstances I was not in the House for the budget speech and I had to listen to the analysis put forward on RTE. This year they invited an even larger number of people from the various interest groups to make their comments on the budget. For the first time they had a young man who represented the young people. In asking him about his attitude to the budget and how it would affect the people he represented, the interviewer had to admit that they had brought him to the studio on a wild goose chase because the budget did not refer to youth at all. Surely there was an opportunity this year to make some of the adjustments I have suggested in an effort to encourage youth employment? The time to cry "stop" so far as deficit budgeting was concerned was this year and because it did not happen I am afraid it makes for an even gloomier prospect for the next few years.

Surely there should have been a commitment to progressive elimination of deficit budgeting. I am not suggesting that the Minister for Finance should have made an announcement of its immediate elimination. The country could not have withstood that reformation so quickly but there should have been a commitment to the phasing out of deficit budgeting over a reasonable number of years. There should have been an exhortation to the rest of us to recognise that income must relate to output and that we cannot expect to enjoy an increase in real terms unless output is increased also. There should have been an effort to get away from the circus aspect of budget day we have seen in recent years with all the trimmings and trappings of media attention, where budget day is regarded as the day for ladies in picture hats to pack the gallery, as the day when political supporters and people who operate on the periphery of politics crowd into Leinster House, as the day for the Minister to give with one hand and to take away with the other hand without making a real attempt to manage the economy.

The most important aspect of the budget this year was the emphasis placed on the capital budget. The current budget was basically a non-event in that it gave as much as it took. In the eighties there should be a decision that the budget will be an examination over a period of months of the Government's approach to spending and of the way they set about controlling finances and managing the economy. This is where the investment plan shows its great weakness. It is not possible to have an investment plan for massive infrastructural capital projects just for a 12-month period, as though all of us were going to fall off the end of the world at the end of 1981. Capital budgeting has to be of a continuing nature. Infrastructural projects, if they are of any reasonable size must extend to more than 12 months. There must be roll-on budgeting, there must be an economic plan. The concept of budget day being the time when the Minister for Finance smiles and holds up his briefcase is gone. The day of wine and roses, of a make or break situation, is over. It is a charade we cannot afford and it is time for us to stop it.

The increase caused by the increases in indirect taxes will push the level of inflation over 10 per cent by mid-month. This consequently will allow the demand for renegotiation of the national understanding, although it is quite fair for many employers to say that they have not been able to pay the first phase. One of the few conscious and deliberate things which the current budget has done is to push the inflation rate over the cut-off point, so that these demands can legitimately be made and the whole national understanding negotiations put back into the melting pot. These will be negotiations, as I said earlier, brought about to exercise the maximum amount of political muscle with, perhaps, not always consideration for the long-term prospects of the jobs of those who are still at school. Their argument, and a lot of the arguments in budgetary contributions, have been as to whether the increases in indirect taxation will bring about an increase of 2, 2½, 3 per cent or a bit more in the CPI. This is probably quite irrelevant and we are all "guesstimating" to some little extent. I would not be at all surprised if all these figures are wrong and the increases turn out to be even greater. As regards the quite expensive postal and telecommunication charges, combined with the PRSI increase and increases in indirect taxes, and the most regressive tax of all announced in the budget, that on petrol and diesel, by the time all these work their way down through the economy, the increase could be of a magnitute larger even than 3 per cent.

I want to refer particularly to the increase in the price of petrol and diesel and to tell the Minister of State who is present that, of all the increases brought about, politically the increase most unfavourably received was that on petrol and diesel, unfavourably received, not just by individuals because they realise it will cost them more to fuel their own car, but because they have noticed over recent years how every time the price of oil or oil products increases, it brings about, in a very short space of time, increases in the price of commodities on the shelf or on the shop counter. Once you increase the price of petrol, you increase the cost of delivery. Once you increase the price of diesel and oil, you increase the cost of manufacture. People have become more discerning and are now much more able to work out for themselves that there cannot be increases in these areas without increases in the end products on the shelves and on the shop counter. From that point of view the single and most regressive tax, and politically the most hurtful from the Government's point of view, is that on petrol and diesel. I was amazed to hear Deputy Noonan describing it as being a tax on a non-essential. We all saw, on several recent occasions when oil and oil products became scarce or unobtainable, the effect it had on the Irish pound. To say that that is a tax on a non-essential is ridiculous and untrue.

The Minister has given a firm commitment to hold down the level of non-pay spending in the public sector to an increase of 3 per cent in real terms. All we can do in relation to that is to compare the present Minister for Finance's undertaking in that regard with the undertaking given by Deputy O'Kennedy in the same office, in February of 1980, when he gave an equally and, I quote, "firm intention" to keep the level of current spending to 12 per cent. In fact, the current spending level turned out to be 20 per cent and the increase in spending on services turned out to be 19 per cent at a time when the official inflation figure probably would have been 18 per cent. One wonders whether the Minister's firm intention to sin no more will be any more successful than his predecessor's was. I have already suggested that it is unrealistic to expect the public service, and especially the local authorities and health boards, to manage to survive in a year when inflation will probably be 15 or 16 per cent.

Deputy Horgan this morning referred to the fact that the OECD had produced a report suggesting that Irish inflation for 1981 might be 13½ per cent. He seems to fail to realise that the OECD report was produced at year ending 1980 and before the OECD were made fully aware of the incautious approach to budgetary policy of the Irish Government for 1981. I imagine that the OECD will now revise their figures. If there is going to be inflation, even on the OECD figure, of 13½ per cent, but, more likely, 15 to 16 per cent, how can the public service, and especially the local authorities and health boards, be expected to keep down to the levels exhorted by the Government? There is no doubt that we will see either the Supplementary Estimates which I have referred to, or, if a general election takes place in the interim, more likely an autumn budget.

There is also the danger that the £200 million for privatisation referred to in the investment plan, and about which it now appears to be very difficult to obtain details, combined with the continuing high level of Government borrowing, will mean a continued credit restriction on the private sector. If there were to be an increase in the provision of employment opportunities, it should have been within the private sector and that does not appear to be so. Apart from certain aspects of the construction industry, we are not going to see any opportunity for additional job places provided by the private sector, both because of the general effects of the budget and the budgetary effect on banking policy, thereby bringing a continuation of the restriction on credit.

It has probably been generally accepted that during the late sixties and early seventies the Irish economy grew by something like 3 to 5 per cent, a varying rate over those years and at that time, because of the change in population and the change in the work force, the economy was maintaining employment and to some extent providing additional employment. It seems to be generally accepted by economists that there is a necessity to have a growth rate of about 3 per cent annually so as to maintain employment levels. There is argument, depending upon which type of economist, or perhaps which type of politician you are, and on what side of the political divide you are, that there will be no growth in the Irish economy this year.

Even the most optimistic cannot expect growth in the Irish economy to be greater than 2 per cent in 1981. That obviously will mean that the economy will find it virtually impossible to maintain employment levels even at the present rate.

As I said at the outset, if we are going to see an increase in the number of young people coming on to the potential employment market without any additional job places being provided for them, we are continuing to sow the seeds of discontent and to provide a recipe for revolt against a democratic system which appears to be continuing to fail young people. If we continue to adopt the sort of approach which we have seen once again from the Government in budgetary policy for 1981, we are, in effect, mortgaging the job prospects of the young children who are still at school. When they join the pool of the unemployed, then they will, in turn, reject the political system which did not provide for them. That is the danger of this situation.

Debate adjourned.