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Dáil Éireann debate -
Wednesday, 11 Feb 1981

Vol. 326 No. 8

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).

I was speaking yesterday about the 125,000 people on the unemployed register. We can add to that 10,000 people who are on short-time. Within the next few months there will be another 40,000 school leavers. As far as the unemployment figure is concerned it will get a lot worse before it gets better. The magical figure of 150,000, which has never been surpassed, is likely to be surpassed under this Government. Listening to the Minister for Finance introducing the budget I wondered if we were doing the right thing as far as unemployment is concerned. We are in a recession and foreign industrialists who had been induced to come here are leaving because of that. What we should endeavour to do is look at our natural resources as far as fisheries, forestry and tourism are concerned.

It is hard to realise how much the tourist industry is suffering under the present Government. Last year was probably the worst year it had. Before 1980 the forecasts were that it would have its best year. At the end of 1980 all the tourist experts admitted that it was one of the worst years the industry had experienced. During the week Bord Fáilte estimated that in 1981 the industry would show a growth rate of 8 per cent and they said that tourists would come from Great Britain. They mentioned the fact that the £IR is worth 74p against sterling and that this should induce English tourists to come here. The troubles more than anything else have probably hindered English tourists from coming to Ireland.

It is now 18 months since Lord Mount-batten was murdered, an event many English people have not forgotten even now. I would be very wary that we could increase our tourist revenue from Great Britain. I hope Bord Fáilte are right in their estimations but I doubt them particularly as we are basing everything on the devaluation of the punt. I was very disappointed that the Minister for Finance did not give some type of incentive to the tourist industry. In the past two years hoteliers and guesthouse owners have been seeking some new ideas by way of inducing more people to come here on holiday. What have we seen? Petrol has been increased recently by 15p a gallon, as has the price of cigarettes and drink in the recent budget. This in no way helps an ailing tourist industry.

I hope, when I am speaking this time next year, I will have been proved wrong but I am afraid our tourist industry is in for another very severe year as far as numbers are concerned. Last year the figures were down not only for English tourists. Americans did not come in such great numbers and neither did the Germans or Scandinavians. The message being brought home to people in the tourist industry is that we are gradually pricing ourselves out of the market. Anybody travelling abroad visiting countries like Germany, France and Scandinavia — noted to be expensive tourist countries — will have noticed that a lot of their commodities are cheaper than ours at present. I know people contend that the devaluation of the punt is really against sterling and not against the other EMS currencies. Can anybody explain to me why it should be that when one changes £100 in sterling or £100 in Irish money one still gets 30 per cent less for one`s money regardless of the currency one is changing one's money into. Surely the proof of devaluation is the amount one gets for one's £100.

In regard to the EEC I wonder sometimes have we, as a nation, gone completely mad. The EEC are able to tell us that we cannot put import duties on goods coming in here. Import levies are gradually being reduced which means an awful lot of goods are imported completely free of duty, most from Great Britain, but some quantity from other continental countries. In border counties this is particularly noticeable in that one sees so many of our traditional — and I emphasise the word "traditional"— industries now in trouble. For example, there is the footwear industry, textiles and bakeries in respect of which one sees bread coming in from Northern Ireland. It is unbelievable that in an agricultural country like this 25 per cent of the eggs consumed in Southern Ireland are imported or dumped here from Northern Ireland. We have also concrete products and electrical goods being imported from Northern Ireland. We must ask how many cars are manufactured in this country. The position is that practically all of the cars sold here are imported ready-made. What about frozen foods? Ninety-eight per cent of the entire consumption of frozen fish here is imported from other countries. For instance, it is incredible that most of the chickens eaten here are imported also. If one looks along supermarket shelves one sees large quantities of English, Scottish and continental biscuits competing with brands like Jacobs and Bolands.

One only has to go into any large supermarket today to see the amount of goods being imported. Of course the supermarket bosses themselves are largely to blame because they are not really promoting Irish commodities. They are interested only in getting goods at the cheapest possible price regardless of the consequences for the economy. I ask myself: have we really gone mad in that we are not endeavouring to impose some kind of levy on such imported goods? Certainly this is affecting our employment prospects and some part of the 125,000 people at present unemployed have been hit directly by such imports. Sixty per cent of the goods we use or food we eat is at present imported. And it is not sufficient merely to ask our people to buy more Irish. It is up to our Ministers when they go to Brussels not to allow this free market situation to obtain, allowing the larger countries to use Ireland as a dumping ground, as they are doing in regard to chickens and eggs at present.

Let me emphasise this point by elaborating somewhat on the egg situation in Northern Ireland. At present 25 per cent of the eggs consumed in Southern Ireland are imported from Northern Ireland even though the punt is worth only 74p against sterling which means that already they are trading at a 26 per cent disadvantage. Were it not for that fact every egg farm in Southern Ireland would be bankrupt today. If one traces the history of this industry one sees that in Northern Ireland egg producers receive grants for their sheds and machinery which the Southern Ireland producer does not. Up to very recently the same industry in Northern Ireland also received a subsidy on their meal which meant that the meal fed to their stock was at a cheaper rate than that at which the Southern producer could purchase his. The Northern Ireland producer used to export the bulk of his eggs to England. In the last two years there have been large markets available, particularly in the Middle East, when the English have at times, quoted a price to supply that market. Any time that English egg producers could not avail of the Southern Arabian market there was a glut on their own market which, in turn, meant that Northern Ireland producers could not supply the English market. Therefore those Northern Ireland producers dumped their surpluses down here leading to the erosion of our market. That has been allowed to continue. I see the Minister of State at the Department of Agriculture sitting opposite, I would draw his attention to this very unfair competition. I am trying to highlight one point only. This practice should not have been allowed to continue. It is ludicrous that one in every four eggs consumed in this country at present is imported. Indeed one could easily name 250 articles in respect of which jobs are being affected here. It is high time that our Ministers stood up to their EEC counterparts, stating that they will not allow this practice to continue because it is affecting our job situation and economy generally.

As far as manufacturing is concerned, I do not have to tell the House that every other country in Europe is working on lower overheads in relation to diesel, fuel oil and petrol. I do not have to tell the House that we have the most expensive telephone and postage stamp set-up in Europe. We are paying more for insurance contributions than any other European country. We are gradually pricing ourselves out of business. I can see no sense in allowing those goods to come into our country. The result is that factories are closing. Factories, like Hanson in Sligo, which were welcomed with a fanfare and were expected to give employment not only to the people in the immediate area but to people from three or four counties, are on short time and near to bankruptcy. GT Carpets had to close because of the cheaper carpets coming from the North. I could name at least 16 factories in my own constituency.

But we have natural resources that are not being used. In regard to forestry we are exporting timber at £1 per ton to the Swedes because we have not got the processing plants here to process it. We are offering £125 an acre to private forestry to encourage them to grow more trees.

We have to do something far more radical. Last year the Minister did not even reach his planting target of 25,000 acres and that is the minimum target that any Minister should be interested in replanting. He tells us that there is yet another plan. Every day we hear about plans but we are not seeing any action. The latest is that there is a new plan whereby the EEC will give pound for pound to develop another 50,000 acres in the underdeveloped areas over a ten-year period. It is high time that the State itself started to look at the forestry industry and, as private industrialists do not seem to be making a go of the State forests, the State should decide to plant, thin out and set up large saw milling enterprises and processing of timber and market it here. The forestry is the most neglected industry we have here and it is an industry where we could probably give work to 10,000 more people.

This budget has proved that we have borrowed to spend. Some day I would like to see a Minister borrowing to invest in national resources, to make use of all these wonderful resources that we have, to secure full employment based on something long term. The three most long term things in Ireland at present are forestry, fisheries and tourism. The Government should give the other industrialists that come in here from abroad the right incentives by making sure that our products are at the right price and putting a stop to all these terrible imports coming in from other countries that are so damaging to our economy.

Most speakers have dealt in fairly considerable detail with the various items both in the budget and not in the budget according to their taste. I would like to spend the bulk of my time in a more general context because it is important that we should not lose sight of the role the budget should play in the operation of the economy. The easiest way to summarise that basic point is to say that the budget is not and should never be simply an exercise in economic arithmetic. On the contrary it is a political act in the best sense of that term in that at any time the economy will have a number of different conflicts, problems, issues, arising within it. It is the task of the Government of the day to deal with these problems as adequately and as fairly as they can. That whole prospect of trying to deal with conflicting things and various outstanding problems, seeking to strike a sensible and reasonable balance among those conflicting pressures, is the essential task of the politicians in an elected assembly.

The budget is one of the main instruments by which a Government can undertake one of these acts of political concensus. It is an element of helping to resolve conflicts within society by peaceful means. So what is the context of this year's budget? We can all agree on the main problems facing the country at this time. We know the pressures on the inflationary front. We know the problems of rising unemployment. We know the difficulties of achieving some sort of balance in our external payments with the rest of the world and we know too that because of the international recession there has been little if any improvement in living standards and hence we want to see a resumption of growth in output and living standards at the earliest possible date. We can all agree that these are the main economic problems confronting the country. We know too that in any attempt to tackle these problems we want to see the solutions dealt with and taking a form that will win acceptance throughout the community as being reasonable and fair among all the different sections of the community.

What then should we say about the budget as it has sought to deal with these problems this year? Here I was fascinated by the approach which Opposition speakers were adopting because to my mind they have been behaving in a two-faced manner. One could go further, in that in some instances I would suggest that they are almost being deliberately dishonest because, while it is easy to recognise the problems, it is not so easy to come up with satisfactory solutions. Indeed, I know of no set of policy measures which will solve all of those problems simultaneously in a satisfactory way. In other words the Government of the day must make a choice among those conflicting problems, must decide what their order of priority is going to be and it is no service to democracy or to the task of satisfactorily overcoming those problems to have Opposition speakers both running with the hare and hunting with the hounds.

Why do I say this is what they have been doing? We could summarise the requirements of dealing with these problem by saying that if we are to resume growth and if we are to bring down the level of inflation we need to find some way of curbing excess spending, on the one hand, especially on imports, and on the other hand, find ways of increasing output here in Ireland. If the Government are to help that process through the budget, that will call for selective additional spending. On the other hand, we know there will be claims for giving relief to some sectors of the economy that were experiencing difficulties, the two main sections being social welfare recipients and the farming community. Everybody agrees that improvements in social welfare benefits were needed so that the weaker sections of the community would not suffer any reduction in their living standards as a result of price rises.

Farming had gone through a very difficult period in the last two years and there were very special circumstances which suggested that specific financial reliefs should be given. Action of that kind requires either extra Government spending by improving social welfare benefits and so on or reducing the amount of tax revenue the Government are seeking. In the case of farming the Government reduced or abolished some of the tax burdens confronting farmers.

So much for those conflicting approaches. What were the Opposition saying? They said on the one hand we had not given enough, whether to farmers or PAYE taxpayers, or we had not spent enough through the provisions made in the Estimates or in specific areas. If we were to tot up the various implied remarks from Opposition speakers on these heads we would come up with a frightening total to which I will refer in detail later. At the same time that they were demanding more Government spending or more tax cuts they were castigating the Government for failing to bring about a sufficient reduction in the level of Government borrowing. Phrases were used like "restoring order to public finance" but whatever the precise language we know what was intended — that the level of Government borrowing, which we know has been running at an unsustainably high level in recent years, ought to be reduced at the earliest possible date. Of course we cannot simultaneously reduce borrowing, cut taxes and increase Government spending. This is where I accuse the Opposition of being two-faced.

I will give some examples of the way they have been doing this. Immediately after the Minister concluded his budget speech Deputy Bruton spoke of the problems for farming and referred to the measures introduced in the budget to give some relief. He said:

What does this budget do? It offers them £29 million, a mere 5 per cent of what is needed.

He had said:

It has been calculated that to bring farmers back to the income position that they enjoyed relative to the rest of the community in 1978, a transfer of resources to agriculture of approximately £645 million would be needed.

He then went on to describe £29 million as a mere 5 per cent, which in arithmetical terms it is. I do not know how much Deputy Bruton would envisage as a satisfactory amount to offer farmers this year but I am sure he recognises it is not possible to offer them anything like £645 million. Presumably he has a larger figure in mind, and he is certainly holding out that prospect to the farming community.

The next morning Deputy FitzGerald, the leader of the Fine Gael Party, in his contribution to the budget debate took a similar position. He said:

The farming community are, justifiably in my view, incensed that so little attention has been paid to their plight. If their income were to have retained in 1981 its 1978 purchasing power it would need to have been £635 million.

He went on to say that the Government could not find that sum this year and that any Government concerned about the hardships suffered by this important group would have made a serious attempt to alleviate these difficulties. Again we are left with a clear presumption that a serious attempt would need a much larger sum of money. If £29 million is a mere 5 per cent and if that is not a serious attempt we will have to pencil in a sum which is more substantial. I see Deputy Bruton in the House and perhaps he can assist me. He said £29 million is not enough; could we pencil in £100 million?

The Deputy may be aware that we published our six-point plan with detailed commitments amounting to £70 million. I am surprised that the Deputy who pretends to be so well informed is not aware of this proposal——

Deputy Bruton is not entitled to speak at this stage.

I replied at the invitation of the speaker in possession.

The invitation should not have been issued or accepted.

I trust the Chair will deal with the speaker in possession in an appropriate manner.

I said the invitation should not have been issued or accepted.

I wish to be as fair and as accurate as possible. I am very conscious of this point because later I want to take up the fact that some people continuously misrepresent and misquote some of my statements and positions. In the interests of wanting fair play for all I allowed myself to make a request which I should not have. My apologies.

Let us pencil in a mere £41 million extra to bring the tot up to £70 million. Deputy FitzGerald went on:

I turn now to the PAYE sector. Their claims to greater equity have been swept aside with contempt.

A total of £60 million by way of PAYE concessions is regarded as contempt, and the leader of the Labour Party, Deputy Cluskey, shared a similar position. He said the PAYE workers got £60 million, £40 million of which they got through industrial strength under the terms of the national understanding. He said:

The £20 million was a cosmetic exercise to try to doctor up the PAYE aspect of taxation and put some face on it.

He went on to comment on the additional revenue which would come from the PAYE sector this year, which would be of the order of £140 million.

I do not know what precise figure we would need to have this concerted so that the PAYE concessions would not be swept aside as contempt or as a mere cosmetic exercise, but from the context it would be not unreasonable to suggest that we would have to add on at least another £60 million or £80 million. Let us put in £60 million with Deputy Bruton's £40 million, giving £100 million.

There is also concern and disquiet expressed from the Fine Gael benches about the additional receipts from business taxation this year through bringing forward the payment date for corporation taxation, the clear indication being that that would not be done. We can put down £66 million there.

No additional revenue will be derived from that. It is bringing in money this year which could have been provided for next year.

Yes, but it would have the effect of reducing the budget receipts this year by £66 million and, therefore, would worsen the budgetary position this year by that amount. At the moment I am dealing with this year's budget.

That is if the Deputy only thinks in a one year term, as seems to be the position with the Government. A new Government would look forward.

Deputy O'Donoghue is in possession.

I want to point out to Deputy Bruton, if he has not learned the fact, that the budget is a financial statement dealing with this year. Therefore, if one is going to talk in financial terms, one must begin with the budget as it is and one must talk about the finances in 1981. I will be dealing with other years in due course. We would not have been collecting that money this year if we were to accept the Fine Gael position. That puts us up to £166 million—£40 million for farming, £60 million for PAYE and £66 million for business taxation. With regard to the spending side, many Opposition Deputies, Deputy Bruton included, have been making the point that in their opinion the current Estimates do not make sufficient provision to meet costs this year. A figure of £112 million was quoted by Deputy FitzGerald.

The trouble is the Estimates are totally dishonest.

The clear message is that the Opposition want to increase the current spending Estimates by at least £112 million. That is the sum which in their view should be added on simply to maintain the existing level of services. In addition, we had numerous statements and suggestions from spokesmen on different subjects about the inadequacy of the provisions in their areas. They spoke about the need for additional resources for the particular areas they were concerned about. This is perfectly understandable.

We know there is always a large number of possible areas in which improvements can be made. There is never a shortage of scope for doing good works, there is simply a shortage of the necessary resources to pay for those good works. If we are to take the suggestions which come from the educational field, from people like Deputy E. Collins for Fine Gael or Deputy Horgan for Labour, from the housing field, somebody from the Environment and so forth, we could reasonably add on at least another £30 million to £40 million as a minimum sum, which would probably be derisory in their opinion. I am sure we could put it in as a minimum sum which would have been needed to satisfy their statements. That adds up to something of the order of an extra £300 million either by way of extra spending or by way of reduced taxation.

That is what the Opposition wish the public to pay. If they do not mean that, if they want to say that they would have brought in a budget which would have had a borrowing level the same as that put forward in the Minister's budget, or if they want to go further in the direction of restoring order in the public finances, to use their phrase, they need to show us where they would have made the alternative cutbacks or where they would have got the alternative additional tax revenue to satisfy those claims. I believe they have not any such intention. They were very coy on the subject of additional taxation with one or two exceptions on the Labour benches, to which I will come later.

The message to me is absolutely clear. The Opposition were trying to hold out to the public that if they were in charge of the public finances they would have behaved more responsibly by having a smaller borrowing requirement, while at the same time they sought to pretend they would be able to spend more money under the various headings which I have taken as examples. That is simply not possible and is simply not true. It does no service to the House or to the people to continue that sort of pretence, hypocrisy and misleading statements. That is all I propose to say about the Opposition's contributions to this year's budget, although naturally I will have remarks to make about their contributions of a more general nature.

I would like to refer to one other contribution by Deputy FitzGerald. He said he thought it was an extraordinary budget in the sense that the Minister had managed to please nobody. He had not satisfied those who were making claims on him for additional spending or tax cuts and he had not managed to satisfy those who wished to see a greater reduction in the level of Government borrowing. Deputy FitzGerald is concerned because the Minister should have been able to do more to make his budget politically attractive or should have been able to do more to reduce the level of borrowing. What could he have done to make it more attractive? When we look at the budget statement we find that the Minister made provision under two headings which he need not necessarily have done. I do not believe the House would have criticised him if he had not made those provisions.

On the capital side the Minister made a contingency provision of £70 million to cope with any additional possible demands that might arise in the course of the year. Secondly, in the current budget he made a provision of £80 million for additional possible settlements of special claims for public sector pay, a total of £150 million. I do not believe, judging from the tenor of the remarks from the Opposition benches, if the Minister had not made those provisions, there would not have been any criticism of him. He would then have been in a position to reduce his borrowing requirement by that amount, a not inconsiderable reduction, almost 2 per cent of GNP.

The special pay increases cost £137 million last year.

I understood from the contributions from the Fine Gael benches that they felt there should not be any special pay increases in the public sector. If there should not be any special pay increases this year there should not be any financial provision for them. The Opposition cannot have it both ways. That £150 million could have been used either as a contribution towards reducing the borrowing requirement or, if we turn to the other side of the account, if we want to be more politically popular, what could the Minister have done? He could have settled for a borrowing figure similar or identical to the one he actually brought forward and instead have gone for a much lower level of taxation increases.

Perhaps we could settle for 5p or 10p on the gallon of petrol instead of 15p. Perhaps we could settle for a modest 2p or 3p on the pint instead of 6p, and so forth. All would have been perfectly plausible and all could have been done with the lower level of spending which would then be provided. Therefore, quite clearly it was open to the Minister and the Government, had they so wished, to have done what Deputy FitzGerald and other speakers have implied should have been done, namely, that they should have dressed it up to make it politically more attractive, or, on the other hand, they could have made a bigger contribution towards lowering the borrowing requirements.

Surely the fact that neither of those courses of action has been taken suggests that the Minister was not seeking the easy way out. He was not going for the convenient, politically attractive solution which in the longer term would not have made any contribution towards restoring order to the public finances. Equally, by going for the public borrowing approach, by leaving the higher levels of tax increase but at the same time not claiming that he was going to bring about a much greater reduction in the borrowing level this year, he was presumably setting himself more modest targets which therefore should be more easily attainable. I find it curious that the Opposition should on the one hand want to hold out to the public the notion that they would have been far more generous than the Government and also at the same time imply that really the Minister ought to have done more to satisfy one or other section or group within the community.

I want to turn now from the question of the budget as a specific one-year financial statement and start to place it in its wider context. We have the other problems, the way in which the budget can impact on the overall performance of the economy and in particular our concern at the way in which it affects employment, inflation and our balance of payments position. A number of speakers chose to make references to the Fianna Fáil Manifesto of 1977 and the policies associated with it. After that they were not quite so consistent. Some of them felt that this budget was a continuation of those policies while others felt that it was a last desperate attempt to get free from what they saw as the wrong approach enshrined in that manifesto. In the circumstances because some of these references were, quite simply, inaccurate, I think I ought to deal with a number of these points and set the record straight. One of the main concerns with the manifesto approach was to seek to do something about unemployment and secondly, almost as an equal priority, was to do it in a way that would reduce inflation. The approach then was quite clear-cut in those terms: to increase employment, to reduce inflation and then, when those two objectives were being implemented and progress being made, we would get ourselves into a position to bring about a reduction in the public sector borrowing requirements. In other words, it was a statement of objective and it gave the then order of priority for dealing with those problems.

A number of speakers seem to be under the mistaken impression that no progress was made in achieving these results and that it was a failure in areas like employment. That simply is not so. The facts are that not alone were the employment targets of the manifesto met, they were exceeded. The latest statistics published by the Central Statistics Office just before Christmas are a dramatic revision of all the earlier statistics under this heading. They show that not alone were earlier estimates for the period with which I am most interested, namely from 1977 onwards, inaccurate, but that the statistics for the earlier years, 1975-77, were also out of date.

In fairness, let me put on the record that instead of, as was thought earlier, a fall in employment between 1975 and 1977, we know now that there was slight increase in those two years of about 15,000. Much more important, what the new statistics show is that during the three years from April 1977 to April 1980 there was an increase in employment of 82,000 against the manifesto target of 75,000. Therefore, I do not see how that can be regarded as a failure. What it does show is that there can be a case for setting ambitious targets. Those targets are described as unrealistically high, impossible to attain and so forth and how then could they be attained? That is a point to which I want to return later.

The more interesting part in some respects is that despite this dramatic increase in employment — and it is the first time since independence that we have seen any significant increase in employment — we now find ourselves faced with a higher level of unemployment than anyone had anticipated earlier. Quite apart from the effects of the recession in causing a loss of jobs in many industries, one of the other powerful reasons is the extraordinarily rapid increase in population. Apparently nobody contemplated a population increase on the dramatic scale that took place in this country especially from about the mid-seventies onwards. That means that, even though we have had an unprecedented level of progress in raising employment and putting more people to work, we also have an even greater demand for employment, an even greater number of people seeking work. That is a measure of the problem, a measure of the challenge which this country faces in the whole area of employment and population policy. As long as this rapid population growth continues we must face up to thinking in terms of either finding work for this population or contemplating a level of unemployment which would be frightening and which in relative terms would make what is going on in Britain at the moment like a sedate tea-party.

People are entitled to take different stances on this question. There are those who say that we should not try to think in terms of providing employment, that instead we should accept the fact that people may have to be educated to permanent leisure, to use the polite phrase, in other words, some form of life of enforced idleness. It would take me too long and too far from the immediate putpose in hand to deal with that issue satisfactorily. The prospect of trying to arrange a society where only some people work and where a great number of people do not work — because there are no opportunities for them — strikes me as a recipe for social disaster rather than social progress. I shudder to contemplate the frightening social evils and tensions which would arise in such a society. Whatever the difficulties of providing employment opportunities for all, it must be the route we follow if we are seriously concerned about having a future country worthy of the name.

I will come back to that subject on future occasions but, obviously, not here today. I wanted to read into the record that there has been substantial progress on the unemployment front during the period from 1977 to 1980. It had more than met the targets which were set. I wish to correct some of the mistaken statements which were made. Deputy Keating said that according to the manifesto unemployment should have been reduced to 32,000 by 1980. That is not so because the manifesto had no targets or numbers in it for the level of unemployment——

It mentioned reduction in unemployment.

It mentioned an increased number of people at work——

And reduction in unemployment.

Deputy O'Donoghue will make his own speech.

We were very careful to say at the time that we did not know what the true level of unemployment was. Indeed, there was some debate about it, as to whether the official figures were accurate or not. We said they were not. We also did not know what the true population figure was. These latest statistics show that even we understated the size of the problem so we were perfectly correct in not putting an unemployment figure on it, and in not saying that unemployment would come down from 118,000, which was the Coalition peak, to 80,000 or 90,000 or any other figure because we knew the true figures for population in the labour force, whatever they were, were different from the ones which were being used at the time.

Let them provide the money.

This is the point. One of the main reasons why we could not get a better idea of the true state of labour population force unemployment during that period, was the shortsighted, foolish decision to cancel the 1976 census.

All the people now unemployed were alive in 1971.

The Minister of State and Deputy Bruton will have an opportunity of speaking later. Deputy O'Donoghue has a limited time.

If Deputy Bruton is going to keep interrupting I had better do the professor and point out that if he wants a pass mark he will have to do better than that because, quite apart from the people who were born in 1971, it is much more important to know the number of people who are migrating, whether immigrating or emigrating. We now know that immigration has been one of the dramatic causes of the spectacular increase in the numbers of people in the labour force. It is simply not true for Deputy Keating to say that we put figures in for levels of unemployment. We did not. We had spoken about the changes which we would make in the numbers of people at work. That was the correct way to formulate it and it has been vindicated by events.

Deputy O'Leary was also uncomplimentary about the manifesto. The gist of his remarks is that the real crime of the manifesto was in raising people's expectations to too great a level. This is a view which has been expressed by a number of Opposition speakers. Perhaps we should not have raised people's expectations, but what should we have done? What would the Opposition parties have us believe they would do in Government? According to Deputy O'Leary, unemployment should be the main priority. He said that unemployment is the major social evil in our society and that there should be a programme designed to put an end to that social evil.

The following morning Deputy Cluskey talked about six things which the budget should have set out to do. The first of those is that it should have stimulated employment. Clearly, the Labour Party at least want to do something about unemployment. I think from their statements, although it is not quite clear, Fine Gael members would like to do something similar. All speakers said they wanted to see a reduction in inflation. They also talked about restoring order to the public finances. At that point I pause and say it sounds remarkably familiar. It sounds like the manifesto recipe, which set out to increase employment, reduce inflation and restore order to the public finances.

The Deputy is going to tell us he did all three.

Please, Deputy Bruton, Deputy O'Donoghue has only 15 minutes left.

It is a comment worthy of Rabelais.

The Deputy cannot take it.

If Deputy Bruton does not stop interrupting he will have to leave the House, he will have his own opportunity to speak.

The Chair is taking up time now.

If the Chair takes up time it will be allowed later on. The chair is taking up time to get some order into the debate.

The Chair is taking up more time.

I was saying that that approach sounds remarkably familiar to me, it is remarkably like the manifesto programme, unless we believe Deputy O'Leary and the general tenor of the remarks from the Opposition benches that the crime is the way in which the manifesto set about doing this was to raise people's expectations. It was holding out the prospect that these things could be done while also raising the standard of living. What possible alternative could there be that would do these things and not raise people's expectations? It suddenly dawned on me that, of course, if re-elected the Coalition would bring back the Minister for Hardship in all his spectacular glory because the only way he could do it would be by imposing savage cuts in the level of public spending. If this is going to be done in a way which will provide employment for everybody, it has to mean equally savage cuts in the level of wages and salaries. Now we know what the manifesto style policy of the Opposition parties would be to seek to restore order to public finances, to increase employment and to reduce inflation. I am not quite sure how far they would have to go in order to bring about this result but at a rough order of magnitude I calculated that we are talking about cuts of at least 25 to 30 per cent in the levels of public sector wages and salaries because that is about the amount that would be needed in order to eliminate even the current budget deficit. That would still leave you with a level of public sector borrowing of about 8 or 9 per cent. I am not being unduly hard on the Opposition when I say that this is the sort of figure they presumably have in mind. It might well be that this is the kind of policy that is being talked about on those benches because some other remarks we had, some in the House and some outside it, rather puzzled me regarding the attitude which Deputy FitzGerald would adopt should he find himself in command. In talking about the way figures were prepared and so on he actually made a very interesting statement. I hope he does not mean it and that he corrects it at the earliest opportunity but it is on the record of the House and it says:

In an argument civil servants win, and that is the end of the matter.

Would the Deputy please give the reference?

Column 562 of the Official Report of Thursday, 29 January. He was talking of a time when he was in Government and debating some numbers that should be adopted. I do not see the point in electing any Government if they adopt that approach. It would be much nicer for us to go home and let the civil servants run the country if that were the fact of the matter. It cannot be altogether an accident that he made a statement like that because outside the House on the "Late Late Show" recently he was asked about the wealth tax and he admitted that they had rather got it wrong and made a bit of a mess of introducing it because as he said — I cannot quote him verbatim but I hope I do not distort the sense of his remarks; I am open to correction — they had spent so much time arguing with the civil servants about the principle of the tax that they had not spent enough time working out the details of how it would actually operate. He was saying that the civil servants were very much wedded to the then death duties — he actually used some such phrase as that they were wedded to them until death would them part.

I thought that was an extraordinary line to have taken. Here was a Minister in a Government saying that they did not really have the power or ability to implement their own policy because at the end of the day the civil servants were doing the decision-making for them. I totally disagree with that point of view, I happen to think that the whole point in getting a Government democratically elected is to ensure that in the end they will take the decisions — not because they are always right; who will claim perfection and say that they are always right? Of course politicians will make a few mistakes but so will the civil servants or anybody else. But the crucial thing is that it is the politicians who are elected to carry the can and it is they who should answer to the public at intervals of three, four or five years, as the case may be.

That was an extraordinary defence to put forward. Incidentally, in the case of the wealth tax I think it is factually wrong, My recollection is that the wealth tax was promised during the 1973 election campaign — it was not called by that name but referred to as a more satisfactory alternative to death duties — and that a committee spent a year preparing the proposals for the wealth tax and other classes of taxes before they were published in February 1974, so that every civil servant and every politician should have had more than sufficient chance to sort out opinions on them. It was only after the proposals were published at the end of February that they became public. There was a public debate and, indeed, a public outcry, because in their original form they were so patently absurd and dangerous to the whole future of Irish business that they had to be amended before enactment into law. Even if there was any validity in the earlier remarks, even if it was the case that there had not been enough time to discuss them with the civil servants, there was certainly sufficient public debate between February and May of 1974 to enable any Government with reasonable intelligence and wit to get their Act in order and bring in sensible taxes. So, to have the admission on television that even after all that process they still coughed it up tells a great deal about the economic acumen and the level of analytical ability which went into the tax proposals of that nature. I dealt with that point because I think it is relevant to one of the other points I want to make about any alternative policy to the manifesto type of approach.

We heard Deputy Cluskey of the Labour Party also lamenting the departure of the wealth tax. Clearly, he does not share Deputy FitzGerald's view that it was all a mistake. My point is that, whatever general attitude one might have about reforming the tax system so as to produce greater equity, one would want to be very careful to make sure that in a small open economy such as ours which has to earn its living in competition with the rest of the world we do not put Irish people at a disadvantage in their own country. That is precisely what a wealth tax was doing to all Irish business. We were saying that any Irish people who owned a factory or business of any kind were expected to pay a levy on the capital they needed to run that business while at the same time foreigners would not have to pay that tax, even foreign firms located in Ireland were not liable to the wealth tax. How could any Irish Government with a pretence of wanting to win through to real economic independence for its people deliberately set out to introduce a policy that would penalise its own people? That is the basic point I wanted to put on record about wealth tax so that if anybody was thinking or talking about tax reform they would not lose sight of that fundamental requirement.

To return to the argument that got me on to this line, I was talking about the alternative approach that might be used to deal with unemployment, inflation and public sector borrowing requirements. I was saying that it might call for pay cuts of 25 to 30 per cent in the public service. Deputy FitzGerald because of his experience with the civil service may have meant that as a delayed revenge for the sufferings which the civil service inflicted upon them. If not, he should come forward and state what the alternative would be. Some people would say that there is no need for a positive incomes policy of this kind which would actually chop wages and salaries. They ask why we do not do what the British are doing and have Thatcherism, or monetarism, if you wish to call it that.

We certainly have that.

If one really wanted to adopt that approach, would it not have pretty much the same result because with a monetarist policy one does not try to use tax increases or other cuts. One does not have to have an incomes policy as such. One simply puts a very tight ceiling on the additional amount of money available in credit, and then let whoever will make the most of it. In practical terms, that would have to mean that, in the first instance, the pressures would come on the very sectors which we need for our long-term survival and development. When one inflicts a tight monetary squeeze, it is the areas of the economy which have to trade with the western world — areas like industry and farming — which will find themselves at the greatest disadvantage, as compared with those parts of the economy which are protected from foreign competition, the public sector to a large extent, and some parts of the private sector, like banking services, perhaps some domestic industries like cement, where imports would be relatively difficult and expensive.

When one looks at these protected sectors of Government financial institutions, one or two industries catering only for the home market, these would presumably continue pressing their own claims for pay rises and other improvements for at least some time to come and that is what we see happening. If you adopt a policy of simple monetarism, you inflict the maximum damage on the competitive parts of the economy and, indeed, one can see, in that regard, what has been happening in the United Kingdom. British industry and British exports are now being hammered. We saw a little of this in our own case in the early part of last year when the Central Bank — to my mind, unwisely — began inflicting some sort of monetary squeeze here. What happened? We then saw the pressure being put on agriculture and on industry. It was only when rescue packages were put together for both of those sectors, through the introduction of low interest money from the European countries, that we saw a halt to that. Had the trend continued and had the monetary squeeze been allowed to operate unabated, we would be sitting in this House today contemplating an Irish economy in much greater distress, with much higher levels of unemployment and with far fewer prospects of being able to restore its future growth and vitality.

So this is the alternative, such as it is, to the approach which has been adopted by Fianna Fáil in Government for the last four years. If this is the approach which the Opposition wish to offer to the people, let them have the courage to stand up and say so, instead of carrying on this crusade of pretence, on the one hand claiming that they had some miraculous secret formula which will restore order to the public finances, while at the same time pretending that they would be able to do more and better for farmers, social welfare recipients, industry, PAYE taxpayers and so on. That is simply not true and not possible. It does no service to the people to pretend that it does so. We need to recognise that we are going through a period of very rapid — indeed traumatic — change in this country because of the incredible nature of our population trends. We have enjoyed remarkable success in coping with those pressures in recent years.

We have had a very significant increase in employment and, despite the effects of the recession during 1980, there are at least 60,000 to 70,000 more people at work today than when Fianna Fáil came to power four years ago. A significant tax reform was brought about during that four-year period. Rates on houses have been abolished and there has been a substantial reform in the income tax system. Recall that when the Coalition left office a married man began to pay income tax on a pay packet of £23 a week. Today that figure is £55, an increase well in excess of any inflation which has incurred during the intervening years. There has been a reduction in the tax burden on the lower paid. There has been a dramatic improvement in the tax burden as it affects most families, both through the reform of the PAYE system and through the abolition of rates.

There has been a dramatic improvement in the position of social welfare recipients, a real improvement in social welfare benefits of between 40 and 50 per cent during the last four years. That contrasts with an improvement of about 10 per cent during the four years of the Coalition Government and gives the lie to any claim on their part that they were the Government with social concern and that they were catering for the weaker sections of the community. We have made progress and that progress has been substantial. However, we are by no means at the end of our task. Of course, we need to make even greater strides in the years to come.

Having regard to the magnitude of the problems facing our people and the truly deplorable state of our economy, this budget must surely be regarded as the most ineffectual and utterly futile exercise ever engaged in by an Irish Minister for Finance. It is the great irrelevance of our time. It has evaded all the real issues of mass unemployment of a kind unprecedented in the history of this State, of factory closures, redundancies and lay-offs which we witness as an everyday event. This has brought misery to the lives of the vast majority of our people. The hopes of our young people, in particular our school-leavers, have been dashed. All have been betrayed by the promises made by this Government. This budget showed the callous disregard for the unemployed. Far from creating job opportunities, it has clearly endangered existing jobs by the additional taxation on petrol, oil, drink, postal charges and the like, and the failure of the Government to come to the rescue of our vulnerable industries is to be greatly deplored, likewise its failure to provide economic aid. It is not only the vulnerable industries that are involved. The awful truth is that the oldest, the strongest, the most reliable industries, those that provided the best guarantees of employment, are now threatened, many of them as a direct result of the budget.

Under this Government our country has reached a new low in many important areas, productivity, living standards, the value of our £. Conversely, in terms of unemployment, prices, inflation, borrowing and the balance of payments, this Government have achieved unprecedented heights. From any standpoint it is an awful record, shameful and disgraceful. It seems to me that the Government have adopted the philosophy of Toryism, Thatcherism, a policy of trying to solve economic problems on the backs of a vast army of unemployed.

All this is a far cry from the 1977 manifesto which promised us all a new Utopia of full employment, ever rising standards of prosperity, undreamed of before. This economic dream has become a nightmare; the Utopia they promised us has become a living hell for the vast majority of our people. In less than four years they have achieved the notoriety of causing a 30 per cent increase in unemployment. It has been acknowledged by neutral observers, such as the Society of St. Vincent de Paul, that 25 per cent of our people are living in poverty.

The value of our £ is withering before our eyes day by day. It has become a sick joke in the finance counting houses of Europe. It is now being treated as confetti money which has lost its value to the extent of 25 per cent. Is it any wonder that as a State our solvency is being called into question?

I listened with interest this morning to the former Minister for Economic Planning and Development, Deputy O'Donoghue, and his pathetic attempt to justify the budget. I marvelled at his courage and audacity, particularly when he referred to the Fianna Fáil manifesto, because I do not know of any other Fianna Fáil member, certainly not in my constituency of South Tipperary, who has the temerity to mention that infamous manifesto. They would prefer to see it buried, lost, forgotten. The words "Fianna Fáil manifesto" stink in the nostrils of every decent, honest person in Ireland.

Therefore, I marvelled at the audacity of that man who had come to be recognised as the great dreamer of economic dreams. The dream has become a nightmare. The dream he conceived has resulted in economic ruin and financial disaster. That man occupied a very high office in Government until a short time ago. He was regarded as the architect of the infamous manifesto. One has only to look at the Government front bench not only to see that he has been removed from office but to appreciate that the office he held, the Department of Economic Planning and Development, designed and structured by his philosophy, has been abolished and discarded.

Today Deputy O'Donoghue sought to defend the budget and the manifesto with great courage and audacity. His Fianna Fáil colleagues know his achievements or lack of them and they blame him, perhaps not to his face but behind his back, because when he left office he also left economic disaster and financial ruin unparalleled in the history of the State.

Deputy O'Donoghue told us the manifesto was designed "to create employment and to reduce inflation". He did not advert to the fact that there are many more people out of work, that yesterday it was announced by the CSO that 125,100 persons are unemployed, that 7,356 are on short-time, that the unemployment rate went up by one-third in the past year, that it is the highest rate of unemployment in the EEC, 13 per cent. Taking into account young people not yet registered as unemployed and the large numbers coming out of schools, 40,000 according to recent figures, the real unemployment figure is 170,000. By the end of this year the figure will be in the region of 200,000. This man deliberately ignores these figures and tries to purport that under his manifesto there was an increase in employment. Is there any person in this country who would believe that? Whom does this juggler of figures think he is fooling? He is clearly living in cloud cuckoo land and is utterly removed from the reality of Irish life today. No wonder he was removed from office and the very Department of State he presided over abolished, never to rise again except under another Government who would put it to effective use.

Deputy O'Donoghue did not advert to the colossal increase in inflation; this he carefully avoided. The ever-increasing prices have left housewives in a state of stupefaction and bewilderment. They simply cannot cope. Life for the average family has become intolerable and it is an excruciating exercise to try to make ends meet on the average wage. It simply cannot be done and this has become one of the most expensive countries in which to live. No wonder our tourist industry is in the doldrums. Did we ever think we would see the day when it would be cheaper for our people to holiday in America, and possibly to live there, than to stay at home? Yet we have Government Ministers and industrial tycoons hectoring and lecturing the trade union movement and the workers that they must not seek further wage increases and that they should not try to compensate for the increase in the cost of oil and the general increase in the cost of living, even though all the evidence is that it is not the Arabs who are increasing the price of oil but the Government. The budget increase was a deliberate and calculated design.

The fight to maintain and improve living standards must continue unabated and with a more determined effort than ever. The Labour movement which I represent, both industrial and political, will continue to be in the forefront of that fight and I make no apology for that. Were we to lose that fight, which must not and shall not happen, the outcome for our people would be abject slavery. The national agreement must be honoured and there must be no welching on that agreement. It is a bit much to expect our people to suffer the injustices heaped upon them by this Government without taking the necessary steps to defend standards. This is what must and will be done.

In every city, town and village there is at present an air of gloom and despair. In my constituency of South Tipperary unemployment and short-time working are rampant and there is no sign of an easing in the situation. In fact, it is becoming progressively worse. The human misery it brings in its wake is shattering, especially to housewives and young couples who may have heavy financial responsibilities in paying for a house and maintaining a family. Home life is a misery and young lives have been blighted. The future looks grim. There is poverty prevailing all around us where only a few years ago there was full and plenty.

This, then, was a shamefully dishonest budget in that it did not face up to the reality of the situation. By not facing up to the rising tide of unemployment this Government are playing with fire, toying with dynamite. They are sitting on a smouldering bomb which may erupt at any moment. Let us not forget that no longer have an Irish Government the safety valve of emigration. Toryism and Thatcherism have stopped the movement of the emigrant ship and Irish men and women must now remain at home despite the economic circumstances. I believe they will not tolerate the present situation and will assert in no uncertain manner their right to work their own land. The sooner they do so the better it will be.

Our young people — highly educated, articulate, proud and resourceful — will never forgive this Government for the betrayal of the confidence which was reposed in them. They will not stand for the degradation of the dole queue and will not be treated as paupers or slaves to an economic system which denies them the right to apply their God-given talents and energies in productive work. I am absolutely satisfied that the young people will not be conned by Fianna Fáil a second time. I earnestly hope that they will show their rejection of the infamous manifesto through the medium of the ballot box. If this great crisis in their lives continues for much longer there is a real danger that they can be misled into adopting other means of protest and of asserting their rights. Already we hear the sound of marching feet from aggrieved sections of our community — from the farmers. The PAYE people and the students. If this Government remain in office it is hard to know where this marching will lead us. Does it not lead to despair or even to revolt with such a high percentage of young people without work, stripped of dignity and a sense of purpose and with no real prospect held out to them? We are taking a grave risk. Are we not undermining the very pillars of our democratic society in times of protest, violence and extremism? In rejecting the Fianna Fáil manifesto of very pale green is there not the likelihood that some people may adopt a manifesto of a far deeper hue and possibly with an alien philosophy? If that happens many of the things which we hold dear in this House and many of the things we hold precious in our Christian philosophy and way of life will have been imperilled. There is a real danger that, if our generation cannot solve their problems within the present system, people may decide to go outside the system.

In this situation of massive unemployment, massive inflation and a gruesome cost of living, this Government have created a climate, a spawning ground for alien influences which are ever active and ready to undermine the authority of this House and the agencies of our democratic system. I appeal to the Government to act quickly to stem the drift toward social and economic ruin. If the Government have the power and the ability to do so let them do it now, but if they cannot solve the grave problems they should do the honorable thing and get out and let others who have the courage to face the facts take over. Fianna Fáil have been condemned from their own mouths. Their former leader, Deputy Lynch, is on record as saying that any Government which had an unemployment level of 100,000 people should be rejected. Doubtless his words will come true.

In the area of unemployment great play is being made about the increases of 20 per cent and 25 per cent in social welfare benefits. Surely these increases were long overdue. It was well recognised that those depending on old age pensions, widows pensions and so on were in recent times living in poverty, hunger, cold and misery, utterly unable to cope with everyday rising costs. Let us not forget that they did not receive an increase in these pensions since April 1980 and that the cost of living in the interim has increased by at least 20 per cent, 18 per cent in 1980 and by at least 2 per cent as a result of this budget. These people will have to wait until April of this year to get these increases of £5 or £6 per week and on that they must make do for another 12 months. Nothing will be done in the meantime to cut the impact of price increases on those unfortunate categories of persons and there will be no increase in the autumn as the previous Government provided. There is no question of subsidising the cost of living, as the previous Government did for these people. One of the first acts of this Government was to abolish the food subsidies and do away with the second increase to social welfare beneficiaries in the autumn. Neither was the age limit brought down by one iota in the last four budgets.

The free fuel scheme is nothing less than a national disgrace. The administration of that scheme is patently unfair and unjust. The most reprehensible aspect of it is the withdrawal of supplementary welfare allowances, otherwise known as home assistance, when free fuel is granted. It came to my knowledge that the most destitute in our society, the recipients of home assistance, were, on receipt of free fuel, obliged to take a reduction in supplementary welfare allowance. Persons in receipt of £2 supplementary welfare allowance on being granted free fuel, which amounted to £60 over the winter period and which commenced for the first time in rural Ireland last autumn-winter, had £1 of their assistance money taken from them. They received free fuel, which amounted to £60, and sustained a reduction in their allowance of £1 per week or £52 per year. They allegedly benefited by £8 and that was quickly eroded by substantial increases in the price of coal in recent months. I raised this matter prior to last Christmas and was told by the genial Minister for Health, Deputy Dr. Woods, that the reduction in the home assistance allowance was justified on the grounds that the allowance was originally granted as a fuel allowance and consequently the health boards felt justified in withdrawing portion of that allowance when the free fuel was allocated. It was a mean, shabby and despicable trick on the most destitute in our society.

I am afraid that social welfare people were pleased with the budget. The Deputy must be out of touch.

I am giving aspects of the budget which the Minister wishes to ignore. The administration of the so-called fuel scheme makes a mockery of the suffering of the unfortunate people to whom I have referred. I note that it is intended to provide free telephone rental to a new category of people, people who are in receipt of British pensions. I welcome that. Why have we to have the anomaly whereby people in receipt of British pensions, widows pensions, war widows pensions or retirement pensions are not entitled to the other perks of free electricity allowance, television licence, free travel? Why do we not extend those facilities to this category? They are our own people.

I understand there is a reciprocal agreement between here and Britain and between here and the European Community to confer benefits on all such people. Why do the Government continue to welch on this important matter? I have made repeated representations in regard to the widows of Royal Irish Constabulary policemen, of whom there are very few alive. There is one in my constituency and because her pension is payable from Britain she is denied the usual perks that go with the Irish pension, free electricity allowance, free television licence free fuel and free travel. The people to whom I refer could be included if there was a slight amendment to the regulation. Are we in breach of an agreement with other countries in withholding those benefits from the categories I referred to? I again appeal to have them included in the social welfare code.

The failure of the budget to do something positive to stabilise Irish industry and safeguard jobs must be deplored. Every day we witness closures and redundancies and it is no longer a question of vulnerable industries, such as textiles, footwear and clothing, but old-established industries, which had a reputation of secure employment, are now affected. Their future is threatened. It is bad enough to have to contend with trade from the EEC countries but why the Government permit the wholesale closure of Irish industries because of imports from countries outside the EEC is very difficult to understand. We all know that imports from third world countries such as Taiwan, Hong Kong, Timbuctoo and other parts of the world have resulted in closures and short-time working. The Government have allowed this to happen while all around us industrial graveyards are being created and thousands of Irish people are being put on the unemployment scrap heap. Nothing is being done to stop imports from those countries or no financial assistance is being provided for the industries in distress.

The employment subsidy, which was a great advantage to many of those vulnerable industries, is about to be withdrawn. The excuse being made is that the EEC require this to be done. More and more of our factories will have to close because of this. In my constitutency we have seen all the signs of redundancy and short-time working. The most recent one is Cashel Textiles, which was a boon to the town, which had no industries before this. There are very few job opportunities in this town. There is chronic unemployment and an exceptionally high rate of emigration. The people of Cashel are very perturbed about the loss of precious jobs and the real danger of the closure of an industry which has been an integral part of their economic life. I appeal to the Taoiseach, the Minister for Finance, the Minister for Industry, Commerce and Tourism and the Minister for Labour to come to the rescue of this industry and do something to save the situation. If this factory is allowed to close it will be not only an economic blow to the people of Cashel but a psychological blow from which they will find it very difficult to recover.

The Department of Labour must have known for years that this industry was in a bad way and that there was a fall in numbers employed there in recent years. Despite being aware of the situation nothing was done to help that industry. The meat processing industry is also important in my constitutency. There are redundancies and short-time working in this industry. Is it not the height of economic folly that thousands of our cattle are shipped out every week to various parts of the world while our meat processing factories are closing down and laying off workers because they have not got the raw material? The figures for cattle exported last year are frightening. When will the Government curb the sale of cattle on the hoof? Thousands of extra jobs could be provided in our meat processing plants, our canneries, our hide, pet food and bone meal factories. These factories would boom and thousands more people would get employment if we restricted the outward movement of cattle.

Debate adjourned.
Sittings suspended at 1.30 p.m. and resumed at 2.30 p.m.
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