Dáil Éireann debate -
Wednesday, 28 Oct 1981

Vol. 330 No. 4

Finance (No. 2) Bill, 1981: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time".

Mr. G. Mitchell

As I said earlier, I welcome the allocation being made for the modification work necessary to provide facilities for the disabled, particularly as this is the Year of the Disabled. I also welcome the implementation of the provision of the 3 per cent employment quota in the public service for disabled persons. I hope this will be given force of law not just for the public service but also for local authorities, of which many Members have experience.

The announcement by the Minister of State at the Department of the Environment of an additional £30 million for housing is very welcome. In the Dublin area the biggest proportion of houses is being built, but an even greater number is required. In 1979 or 1980 — I cannot quite recall the year — the increase in allocation was in the region of 5.26 per cent. This appalling increase did not match up to even one-third the rate of inflation. During the term of the previous Coalition Government there was a substantial injection of funds into the house building sector in the Dublin region. I hope the House will forgive me if my comments are confined to that area since it is the region with which I am most familiar. This additional £30 million is the sort of injection which the house building programme requires. The lion's share has already been allocated to the Dublin area because of the huge population explosion in that area and it will go some way to alleviate housing problems, together with the Minister's package to make loans more available to house purchasers. These are particularly positive steps in view of the problems faced by the Government. They are not prepared to borrow to meet day-to-day expenditure but they are prepared to do so to make funds available for necessary investment.

The Minister's intentions with regard to VAT registration for small businesses are welcome. As an accountant I am often consulted by people running small businesses who have great difficulty understanding the system. This will be a source of information as to turnover and this is an important factor in view of the need to bring into the tax net those in the business sector. I would hope that sole traders and businessmen would be required under this provision to have their turnover figures certified when submitting their annual accounts. This could help to avoid tax evasion.

I welcome the announcements regarding saving schemes, particularly those for the aged. They are the people in our society least able to defend themselves or speak for themselves since they do not form a pressure group. While the trade unions are appropriately active on behalf of their members, they do not seem to take sufficient interest in the aged. We are not doing enough to help old people, although they are very thankful for the smallest assistance. I hope they will be encouraged to use the index-linked saving scheme.

The Government's policy of transferring from direct to indirect taxation is also welcome. I indicated this morning how groundless was the accusation from the Opposition that there was no need for increases in indirect taxation. Deputies who made this charge said in the same breath that the taxpayer must pay for what the taxpayer gets. It is our proposal that the sector which can afford to pay most will start to pay proportionately more than they have been paying to date in an attempt to create a greater tax spread.

I also welcome the PAYE measures which the Government intend to introduce in next year's budget. Those in the non-PAYE sector are best equipped to find loopholes in the anti-evasion laws. The incomes of those in the PAYE sector are known and they must pay the optimum amount of tax. One way to bring justice into the sphere of taxation is to give the person in the PAYE sector some of the options which are open to those outside that sector.

There is no doubt that many of the self-employed have experienced great difficulties during the past two years. Many people have been using personal reserves to keep their businesses going and often they have very responsible attitudes to taxation. Rather than paying their tax annually in arrears, many would prefer some sort of incremental scheme similar to PAYE. While I welcome bringing the PAYE workers nearer to the sort of freedoms enjoyed by non-PAYE people, I would also welcome at least the possibility for people in the non-PAYE sector to pay tax incrementally or as they make profits. Many people would take advantage of such an opportunity.

The long-term objectives of the Government is to bring national finances under control. This is an enormous task but if it could be accomplished it would be to the benefit of the community generally. Those who now feel hard pressed would reap the benefits. Those people who feel that there are easy options, that there are easy solutions which the Government cannot see, should realise that the steps the Government are taking now are in the interests of the fastest-growing youth population in western Europe. It is in their interests that we control our national finances. We still have people spending money foolishly, even after the election has been lost. I will quote from Economic and Social Policy, 1981: Aims and Recommendations. It was published in September 1981. It is stated at page 5:

The balance of payments deficit on current account indicates the amount the country is spending in excess of its income. The size of the balance of payments deficit is now a fundamental constraint to policy. The deficit is, in large part, the result of expansionary fiscal policy and the growth of nominal incomes in excess of output growth. The net external indebtedness of the State and State-sponsored bodies more than doubled between December 1978 and December 1980. The repayment of the debt incurred will amount to an estimated £460 per employed person in 1981 and could rise to £820 by 1983 if the present Government did not take corrective action.

At page 6 the report continues:

The main problems now facing the Irish economy are unemployment, the high balance of payments deficit, the high current domestic deficit, the high rate of inflation and the high rate of unit labour cost increases. These problems are similar to those faced by the Irish economy in 1980 but they are now more severe. There is urgent need for policies to tackle these problems effectively.

The document states that one of the ways to tackle the problems is to cut out borrowing for day-to-day expenditure. That is the cornerstone of the economic and fiscal programme put before the House by the Minister for Finance in the Finance Bill.

The NESC, the Governor of the Central Bank, independent Senators and all who have raised independent voices have told us clearly that the steps being taken are necessary. As I said earlier, we are not asking the people to accept these moves as popular measures. Anyone who examines the proposals objectively must ask why we have done these things. We have done them simply because we believe they are in the country's best interests. Anyone who has examined the situation objectively believes that.

I do not have to put on record the situation the Government found themselves in when they took office. It was that situation that gave rise to the need for this Finance Bill in the first place. Many Departments would have run out of funds if some of these measures had not been taken. In the Department of Social Welfare and other Departments there were not funds to pay the day-to day expenses essential if those Departments were to continue. For instance, there would not have been funds to pay old age pensions.

That is the background against which the Government were obliged to take the steps now incorporated in the Finance Bill. We introduced a balanced budget which took into consideration the best interests of the country. I have no doubt that will be followed up by steps to encourage further correction of the national economy in the short and medium terms and also in the long term. I expressed earlier my dismay at the facilities available in the House for Deputies. However, I should like to join with the Minister for the Environment in congratulating local authority members who through voluntary steps have contributed to the growth of community efforts. It is in the public interest that there should be proper accountability by public and local authorities. It is essential that there should be closer examination of public accountability at national and local level. This could be responsible for cutting out unnecessary waste, resulting in the saving of resources which could be put to better use.

In this regard, I would welcome an extension to all local authorities of the system begun by Dublin Corporation through a public accounts committee. Dublin Corporation are responsible for an annual expenditure of £200 million. That sort of public spending should not be allowed without the closest scrutiny. That sort of scrutiny should be done throughout local authorities, many of whom spend vast sums of money.

I am tired of listening to well-dressed, articulate, nice-sounding people lecturing the average man on how he should cut back. Many people in this city do not have the luxury of a car or even the luxury of a job. Our leadership should be giving example rather than lecturing. We should be encouraging all sectors of the community, without exercising political prejudices, without looking over our shoulders wondering how many votes we will lose, to appreciate that the system of taxation we are promoting is a fair one, a system to which all sections will contribute appropriately. Deputy Flynn this morning referred to many things, including unity in the Government. I do not want to be drawn into that, but I note we do not have a front bench in the Opposition yet.

Mr. Flor Crowley

There is not even a backbench over there.

Mr. G. Mitchell

Deputy Flynn should be the last to make any comment on such matters. We on this side do not run away from taking necessary financial measures. We certainly would not have done so if we had the sort of majority that would have facilitated us in our job of dealing with the economic problems facing us. Deputy Flynn referred to the fact that the Taoiseach addressed members of the Stock Exchange and said he probably would not find much unemployment there. We are lucky we do not have unemployment there on the same lines we had in the thirties after the mess the economy was left in. The Deputy can rest assured that under the Coalition that sort of economic catastrophe will not occur because we are going to take the economy in charge and see to it that the necessary steps are taken in the interests of all.

Another misquote was attributed to the Taoiseach, that the deficit will not now significantly exceed the deficit budgeted at the beginning of the year. The Taoiseach did not just say that. He said that it would not now exceed the deficit budgeted at the beginning of the year because of the corrective action that had been taken. It will exceed it by something like £200 million, but if corrective action had not been taken it would have exceeded it by something of the order of £500 million. It is because of the corrective action that was taken by the Government that we are now more on course, but even with that action the deficit at the end of the year will be in the region of £250 million more than the Fianna Fáil Minister for Finance said it would be in January this year, in spite of the steps we have taken.

Reference was made to grants for community purposes. I do not wish to get involved in any personal wrangle over these things but the fact is that such grants, which were announced I am sure with the best intentions and on the best information, were announced without a fund being made available. That fund has now been made available. Some Deputies have said that those community grants were being withdrawn. They are not and they will be made available to the community from a fund that has been established, a fund that did not exist prior to this.

I cannot understand why a Member from a constituency such as that which Deputy Flynn represents is opposed to the banks paying £5 million in December next towards the running of the country. No matter what way the Government of the day moves — whether it is composed of Fine Gael and Labour or Fianna Fáil — some Deputy takes upon himself or herself the mantle of protector of the person who is obliged to contribute no matter how well off or how able that person is to contribute. The banks are well able to provide £5 million. It is a wonder, and a pity, they were not asked to do so before now. I hope that next year they will be required to contribute even more to the cost of running the country. We must consider the very high security cost to the country of bank security.

The same attitude prevailed some years ago when reform was introduced in the area of capital gains tax and wealth tax and I cannot understand why Members take positions on such matters. Perhaps it is because they have some particular interest but, in my view, it leaves a lot to be desired. We should be able to say here what we view as right or wrong or else stay quiet. There is little point in saying things for the sake of getting our contribution on the record of the House or, perhaps, with the desire to talk ourselves on to the front bench. Reference was made in the course of the debate that Members on this side of the House were anxious to get over here to occupy the brown leather seats. I should like to say that the brown leather seat I sat on this morning was well worn — in fact, there was a hole in it — from people sitting on their backsides. The time has come when we must take ourselves seriously as a Government and as a Parliament to ensure we work fulltime to put matters right.

I do not accept Deputy Flynn's attack on workers while he at the same time taunts a member of the Government for suggesting that farmers should tighten their belts. I accept the importance of agriculture to the community, having had experience of it in the course of my work with a farming organisation, but it must be clear that workers should not, and cannot, be the only people asked to constantly tighten their belts. This has to be done across the board involving industrialists, farmers and workers, no exceptions, and Members should not be making apologies here for a reasonable and reasoned attempt by a Minister to ask all sectors of the community to contribute equally.

Deputy Flynn said Fianna Fáil were like Snow White in economic terms. It occurred to me at the time that they were more like Snow White and the seven dwarfs but since it has occured to me that they were probably more like Snow White and the 78 political and economic dwarfs.

Mr. Keegan

I welcome an opportunity to debate some of the issues involved in this Bill, even though it is being introduced rather belatedly. Has the House ever waited so long for the introduction of a Finance Bill, a piece of legislation which normally follows the introduction of a budget? This Bill must be seen as being truly representative of the Government's economic strategy. Therefore, I shall spend some time analysing that strategy or, in most cases, the lack or misuse of it. The Government's strategy is in conflict with the Fine Gael manifesto and the Labour manifesto when they went before the electorate. The Coalition were returned to power on a litany of promises which they knew they could not fulfil and which they knew were unsustainable because of the lack of back-up services. Nevertheless, at the end of the election both parties considered it necessary to get together to draw up a third manifesto which the Irish people were not asked to vote on. I am referring to the manifesto which was drawn up in the Gaiety Theatre, the one on which the Government's economic strategy appears to be based.

While the Bill reflects the cruelty of the Governments strategy it is being introduced against the desired wishes of the Irish people because the Coalition Members were elected on a different programme. For that reason those parties have broken faith with those who elected them to the Dáil. The Bill reflects a complete U-turn as far as Fine Gael are concerned. It is clear now that Fine Gael were prepared to sacrifice anything to secure the reins of Government. They sacrificed 90 per cent of their manifesto while the Labour Party sacrificed all their manifesto. That was done because the parties wanted to get into Government to demonstrate to the Irish people what they could do or felt they could do. There is little need for me to elaborate now on their failures because the Irish people were quick to realise those that occurred due to the poor judgment and bad planning of the Government.

I have never known a Government to lose their popularity so fast, but that does not surprise me. I am not surprised because the people expected so much after reading the manifestos of Labour and Fine Gael. Labour promised to reduce the cost of living by from 4 to 6 per cent. They could have done it if they were sincere in their election promises. But they were more anxious to get into Government by fair means or foul. They got in and they abandoned the idea of a 4 per cent decrease in the cost of living and abandoned their plans for full employment. We know what has happened since then. There is more suffering in Ireland today than there has been for many years due to the cruel finance policies and to the lack of planning of this Government. There must be planning if we are to achieve any measure of progress but there has been no planning by this Government because there is no agreement among the Cabinet on the day to day running of the country. Those people got together without the realistic and researched planning that was needed to advance the economy and to create the thousands of jobs necessary to stabilise the cost of living. No effort has been made to do this.

Various Government Ministers and spokesmen have blamed Fianna Fáil for everything. But they are in control. They have it in their power to introduce any measures they wish. But the only thing they introduced is this Finance Bill which is being debated in this House today, and they have done nothing to improve the situation or to improve the economic mess which they blame Fianna Fáil for. We all expected corrective measures to be taken. We all believed the magic wand was about to be waved and that the people would enjoy immediate benefits. But nothing has happened and we are still living with galloping inflation of a higher rate than was even anticipated by the people. It is no wonder that there is such frustration among the people. They do not know where to turn. They were promised so much and got so little and the result is despair and complete lack of confidence in the Government.

How do we tackle this situation? Have the Government any plan? What is in this Finance Bill to indicate that any creative measures will be taken? The cost of living has increased by from 6 to 7 per cent in the last three months. Why did the Government not introduce measures to reduce the cost of living? Everybody expected something on these lines to be done. Nothing has been done. We have galloping inflation and there seems to be no end to it. The standard of living of millions of people has been reduced by the introduction of the budget last July and this Finance Bill now. Let me start with the old age pensioner. Some old age pensioners got an increase of 10p which would not cover a fraction of the cost of the printing of the new pension books or a fraction of the cost of the additional administration involved. Some were lucky and got an increase of 80p.

These increases were nothing but an insult to the people who are least able to fight for themselves. This is the Government who promised so much in the field of social welfare. They promised to eliminate poverty completely from Irish society. How in the name of God can they do that by giving an old age pensioner an increase of 10p per week? What about the wife who lost her husband and was left with many household bills and a young family to rear and educate? What did she get? What did the orphans get? What did the deserted wife with the young family get from this Government? They got next to nothing when one realises that the cost of living has increased by from 6 to 7 per cent. Many social welfare recipients were told they would be getting a 3 to 4 per cent increase in social welfare benefits. We saw what happened. I can be forgiven for reiterating what all those people have been saying. This is another year of Government failure and lack of Government concern in providing for the weaker sections of our community, the people who are unable to look after themselves. The first priority of any Government should be to look after the weaker sections in society. This is an area where this Government have failed miserably.

Let me deal with the taxation increases in this budget for which this Finance Bill makes statutory provision. Every taxable commodity in this country has been taxed more. The motorist who is an average citizen, not a man of wealth or excess means, is now contributing 37½ per cent tax when he purchases a motor car because of the increase in VAT and because of the increase in excise duties. On top of that he must pay the increased cost of petrol, oils and car parts which are the most expensive in all Europe and carry the highest rate of tax in Europe. This Finance Bill goes all the way towards killing the goose that lays the golden egg because the motorist can take no more. Recently I got figures from some of the companies with regard to oil and petrol sales. I discovered that petrol sales were down by 12½ per cent during the month of September, that car sales have dropped by 16 per cent. That is a clear indication that the people cannot afford to provide themselves with transport to enable them to get to their place of employment if they are lucky enough to have a job. This Government have not only killed off the motoring industry but have deprived thousands of people of employment as a result because most garages are now on half time; some garages are on a three day week and have let go staff and other garages have taken on no apprentices as they would normally do in September or October because there is no work for them. The Government are responsible. They went out to bleed the motorist. They felt that he was some sort of individual with unlimited financial resources. But they have now discovered that there is an end to the tank in which he carries his few bob and the result is that we have more and more unemployment in the motor industry than was expected.

Then, of course, the hardy annuals were taxed. They received another belt in this budget. There were increases in the price of drink and tobacco resulting again in a fall-off in the consumption of beer and tobacco. This is not surprising because the impositions were penal and the people just had to call a halt and decide that they could not go on having an odd jar in the same way as they did before. They have discovered they have to smoke less because there is no way they can meet the additional costs. This results in more unemployment, more people living below the breadline and less revenue collected in the long run. If you really want buoyancy in revenue you must ensure there is a greater demand for the products which carry the tax. How can you have a greater demand for a product if the price goes beyond the reach of the average citizen? That has happened as a result of the budget last July and the people have decided they will not tolerate this any longer. There is, because of this budget, a fall off in the consumption of drink and tobacco as well as the purchase of petrol and oil. We will be told that this will save our economy because it will help to cut down oil bills. That may not be good for the country because we may have more unemployment as a result. If we want a booming economy we must ensure that John Citizen has as much money as possible in his pocket. When the Government decide to take the maximum from John Citizen he has less money to spend and our economy suffers.

That is what is happening now as a result of last July's budget. I believe this has all been caused by the lack of policy by the Government. It appears to me that the Government did not carefully research their policies before they introduced those penal measures. The sales in every sector have fallen because of the VAT increases on cars and excise duties and increased taxation on all the other commodities. I remember on one occasion when a Fianna Fáil Government were defeated because they put a penny on the pint. Nobody would bat an eyelid if only one penny was put on the pint today. In 1948 a former leader of the Fianna Fáil Party lost the election because he put a penny on the pint. The Opposition based their strategy on the poor man's pint. He now discovers he needs a pound before he can buy that pint. I do not know how an old age pensioner can buy a pint today in view of the fact that many of those people have only been granted an increase of 10p per week.

Perhaps the Government may intend doing something next year. Perhaps they have some magic wand available so that next year people will enjoy huge benefits. There is nothing in the Finance Bill to indicate that the Government will do anything drastic to compensate the lower income groups for the reduction in their living standards. There is a reduction in living standards because of the deliberate policies of the Government. I hope the people get an opportunity to correct that situation.

I would like to remind the House that nothing has been done for agriculture in the last few months except the abolition of part of the farm modernisation scheme which was to encourage farmers and assist them to become more efficient and more productive. Sections of this scheme have been abolished completely. This deprives farmers of the opportunity of becoming more competitive, increasing their production and becoming more efficient. It is not surprising that there is an air of despair among the farming community at the present time. I am, however, surprised that farm leaders are not as vocal as they were when Fianna Fáil were in power. During the last six months of Fianna Fáil Government farmers got benefits to the tune of £340 million. There is no evidence of anything like that happening today. Farmers are being told they must tighten their belts and must accept a lowering of their living standards. Fianna Fáil were conscious that farm incomes had not kept pace with other sections of the community during the last two years. It appears the Government are determined not to do anything for the farming community except to punish them whenever they get an opportunity. We have clear evidence of that in the withdrawal of portion of the farm modernisation scheme.

Perhaps the Government will realise the folly of what they are doing. I hope for the sake of agriculture the Government will do something for that important section of the community. Agriculture has always been one of the most important elements in our community because we are producing a product on which we can base our economic growth rather easily. The farming community only require small incentives and a guaranteed market for their produce. Markets are available to them because of our accession to the EEC but costs have outpaced farm incomes.

I am surprised at the Government's lack of concern for farmers. We all remember when the new Ministers were appointed that they were going to do this, that and the other. I expected the farming community would be a privileged section. This has not happened. The Government are punishing them in the same way they are punishing old age pensioners and all the other less well-off sections of the community. We have only to compare this kind of treatment with the efforts of Fianna Fáil to improve the position of farmers during their last 12 months of Government. The Minister for Agriculture at that time expressed concern for the farming community because he realised their importance to our economy. We have a completely different situation now even though the Government received a strong farmer vote in the General election last June. It can be said that the farming vote in all of Leinster went to the Fine Gael candidates. Those farmers are now disillusioned. They have been let down by the Government who promised so much. Their expectations were high, they expected their position to improve but they have got their answer from the Government.

I believe the Government are not showing any concern for that basic industry which has meant so much to our economy over the years. Every farmer throughout the country is receiving demands today for income tax which he does not owe and has no means of paying. I am inundated with farmers calling to my clinics and my home every day with bills from Revenue and the county registrar for money they never owed, money based on assessment. I wish some member of the Government would wake up to the situation and realise what they are doing. They are paying good wages to the staff in Revenue. They have sheltered conditions unlike farmers. Those people are harassing the farming community day in and day out, demanding money which farmers have not got. Am I to assume that, as a follow-up to all this punishment, farmers will be jailed if they do not pay those assessments, even though they have not got the necessaries of life?

I will await with interest the Minister's reply to all the points made in this debate. I am very concerned about the way the Government are allowing those people to spend so much time and money trying to extract money from people who are without income. This is the saddest situation which I could ever envisage for the farming community. Is this a deliberate attempt to bleed them white? Are they expected to let their wives and families starve in order to pay money which they do not owe?

The farmers of Ireland cannot keep accounts in the same way as a businessman does because their system is completely different. When the Fianna Fáil Government were in power I argued for the introduction of a simplified method of filling in income tax forms. I expected this Government to continue to simplify that method, but nothing has happened. Whether or not farmers owe income tax, and whether or not they are in a position to pay it, they are expected to pay an accountant £300, £400 or £500 to do their books and send them up to Revenue. Then they discover they have no taxable income. That is another way of extracting money from farmers. It is unjust and unnecessary, and it has put the farming community in dire straits.

If Fianna Fáil had introduced many of these measures, what would the agricultural correspondents be printing in our newspapers? What would the farm leaders be saying? Farm leaders are not as militant now as they were when Fianna Fáil were in office. Fianna Fáil were the only party who demonstrated beyond doubt that they were concerned to see farming incomes holding their place with other sections of Irish society. It appears that the farming community have been written off. This is a sad day for Ireland and the Irish people.

I appeal to the Minister for Finance to try to control the Department of Finance and the Revenue Commissioners. Surely he can find other work for them to do. They must have nothing to do if they can spend time and money writing letters to farmers and to the county registrar, the sheriff as he is known in rural areas, demanding payments from people who have been deprived of an income. Something has gone wrong somewhere. This situation cannot be tolerated much longer. I never saw farmers in such an angry mood as they are in at present. They have reached saturation point. If they become militant next year, the blame for their militancy and their actions must rest squarely on the shoulders of the Minister for Finance, the Taoiseach and the Government who promised so much to the farming community and gave them so little.

I now come to the greatest gimmick in modern electioneering which played a major part in putting this Government in office, the promise of £9.60 a week for the stay-at-home wife. That was the greatest con job of the century. I am not surprised that so many women voted for that part of the Fine Gael election manifesto. They believed they would get an envelope with a cheque for £9.60 in their letterboxes each week, which they would have for themselves, and which would enable them to enjoy a certain amount of independence. That was last June. We have now almost reached 1 November and there is no sign of that £9.60 per week being paid. I do not know whether it will be paid. A previous speaker asked do the Government intend to take that £9.60 from the husband and give it to the wife without consulting the husband. That question remains to be answered. I hope it will be answered before the conclusion of this debate. It is a vexed and burning question.

I do not blame women if they are angry. We all appreciate the great contribution women have made to Irish society. I would not begrudge them £40 or £50 a week if the State could afford to pay it. Society owes a great deal to women. I should like to see something definite given to the stay-at-home wife. If we could encourage more married women to stay at home, we would make more jobs available for single people and young people. It will take more than £9.60 a week to encourage the working wife to stay at home and make jobs available for others. Have the Government carried out any research into the cost of paying this £9.60? Enormous administration costs must be involved. Hundreds and hundreds of additional civil servants would be required to administer the scheme. In the end the scheme will cost more to administer than to implement. Compared with its value last June, the figure would need to be a great deal higher to keep pace with the inflation and the fall in money values in recent months.

The payment of £9.60 was to be very limited. It was to be confined to the wives of PAYE workers in the upper income bracket. It was estimated that 250,000 women would benefit. Further thousands of women were convinced by Fine Gael canvassers that every wife would get a cheque for £9.60 every week in her letterbox. Later it was discovered that farmers' wives would not get it, even though they had no income, that the unemployed man's wife would not get it — and we have 160,000 people unemployed. The wife of a self-employed man would not get it unless her husband was paying over £600 a year in PAYE. It was the greatest con job of modern times and will go down in history as such.

I am not surprised that Fine Gael Deputies are embarrassed. They did not research this proposal before it was introduced. If they did, they might not have accepted it or put it in their election manifesto. It paid off from the point of view of votes. The Government have a very slim majority. The real Government is a man who occupies a seat over there. Unfortunately he is not here now. He was here all morning. He represents the real Government and the real Taoiseach. He is the man who holds the Irish people to ransom. Perhaps he will answer sooner or later for the lack of Government action on their manifesto. Perhaps he will be able to explain why this proposal was so limited. The women of Ireland were conned. They are highly intelligent women who genuinely believed that they would benefit to the tune of £9.60 each week.

How many men were consulted and asked if they were prepared to have £9.60 deducted from them to give to their wives? We should bear in mind that 95 per cent of family homes are happy ones. The husband and wife get on well together and there is family unity. What can be achieved by taking £9.60 from a husband and giving it to his wife? It does not make sense. It never made sense to me or to most Fianna Fáil people. We believe it is unworkable and unacceptable and the greatest con job of modern times. The sooner the Government give the electorate an opportunity of voting on the issues on which their expectations were based last June the better for the country.

I listened to Deputy Mitchell and he referred to the talented men in Fine Gael. This scheme must be the work of those talented men. He spoke about energetic reform. Will the talented men carry this out? Perhaps when the Deputy is a little longer in this House he will not be as enthusiastic as he is about the talented men in Fine Gael. They spent the last three months arguing among themselves about Government policies and insignificant details which did not concern the majority of the people. That is the work of the talented men. If they are the talented men then God help Ireland. They promised to introduce reform in Irish society.

An Leas-Cheann Comhairle

Could I encourage the Deputy to direct himself more specifically to the taxation provisions in the Finance Bill?

Mr. Keegan

This Bill is so involved, wide-ranging and varied that one can be forgiven for wandering from its terms. There was an old character in my county of Westmeath who said: "Young fellow, if you want to get to Mullingar go around by Tullamore".

This Bill does not indicate to me that any worthwhile reforms are in train or that the people can expect anything significant in the future. Many people expected that the IDA would be revamped and reformed. The latest opinion expressed to me is that the Government have plans to abolish the IDA. The IDA played a significant role in our industrial revolution in recent years. The Government should make a decision with regard to it. Have they plans to run it down, supplement it with something else or replace it? I have received complaints that no grants have been paid out for several months and that would indicate that the Government have done some thinking in regard to the future of the IDA. There is no mention of it in this Bill but Government strategy is based on every Finance Bill. The work of the IDA must be of serious concern to everyone with a job and to those who expect to get one in the near future. I hope this matter will be clarified by the Minister.

The building industry is in chaos. Only last Thursday I met an architect who told me he had no work for the first time since he established his business. He was faced with the choice of closing the door and letting seven people go or trying to survive on his savings until some building project came along. Due to the Government's curtailment of housing grants many people who contemplated building have now decided otherwise and the result is more and more unemployment.

During the election campaign an issue was made of the lack of finance for road construction. We have waited patiently for the last five months to see would this Government inject capital into the road fund. Nothing has been done in that area. Local authorities have received no special notification about any additional funds. It would appear that promises were beneficial to the Government and they paid off. The same applies to our infrastructure. We have sanitary and telecommunications services which are vital to advance the economy. There is evidence of cutbacks in health board areas. There is a slowing down of the hospitalisation programme which was pursued by Fianna Fáil. Where is there evidence of concern for people in need? Where is there evidence of concern for the aged and under-privileged? There is none.

We know that medical cards are being reviewed and it has been alleged that thousands are being withdrawn from people in an effort to cut down on health board demands. Another blow to those who can least afford it. Where is the combat poverty programme which we believed would be pursued so vigorously by this Government? They appointed a Minister of State to deal with that aspect of Government policy. Has that been shelved together with their other promises? I believe it has.

There is nothing in the Bill to indicate that the Government have any plan to alleviate unemployment. The Government have abandoned the fort in regard to unemployment and have just written the unemployed off. The only evidence we have of Government or ministerial policies are statements we read in the newspapers. The unemployed can expect nothing from this Government. There is a clear example of this in the fact that jobs have been frozen in the public service despite the fact that some proposed legislation will require additional staff to administer it. I do not know how the Government can reconcile these two things.

We had another typical example of the Government's lack of concern for jobs by their decision to close the Tuam sugar plant. Beet that was processed in that factory was grown in the midlands. That industry was vital to the economy of the west. The impending closure of the Tuam factory represents a sad day for Ireland and especially for the thousands of people in the Tuam area who have become so dependent on that great industry around which the whole economy of the area was built. However, we can only hope that in the meantime there will be a change of Government and, with the return of Fianna Fáil to office, the people of the west and of the midlands can rest assured that the wheels of industry will be kept revolving in Tuam.

The area of youth employment is referred to in the Bill. Regarding the Government's proposal to set up another agency to deal with this area, have we not enough agencies already to do this work? The youth employment scheme has been an outstanding success. It was operated by the Leas-Cheann Comhairle when he was Minister of State. That scheme was responsible for providing a lot of work for young people. All we need to do now is to improve on it in order to ensure that it works more efficiently. The machinery is there so there is little point in setting up a costly new scheme. The Government should forget about any such idea and continue to use the IDA and the schemes already in existence in creating jobs. In this way it would be possible to find jobs for thousands of young people. Much credit is due to AnCO for the part they have played in preparing people for employment. The success of that scheme has surpassed all the expectations of those involved. The training centres have been established in strategic centres around the country. Agencies such as AnCO have given hope and encouragement to thousands of boys and girls who are anxious to have permanent employment at home. These young people have no wish to join the dole queues. They want the opportunity of earning a living and of playing their full role in Irish society. The agency that the Government are talking about may be all right up to a point but it might result in an over-concentration on the needs of youth while ignoring the redundant workers who have wives and children to look after and who must meet their mortgage repayments. There could very well be a conflict to that extent.

Deputy Mitchell spoke of Dáil reform. I do not know how much might be done in this area. He raises the question, too, of additional office space but I would remind him that the many thousands of people who are anxious to come in here are not concerned about such matters or about the colour of the seats. If we are to have a further period of economic recession we should consider the needs of others and leave reform of the Dáil and the improvement of services in the House to a later date. Somebody has said that civil servants would not accept the standards that Deputies must accept but somebody must make sacrifices and we, as Members of this House, should be content in the present economic climate with lower standards and get on with the job of trying to improve the standards of those outside.

There is reference in the Bill also to our foreign debt. We should remember that every country has a foreign debt in that they borrow from some foreign agency or other. Such borrowing is nothing to be ashamed of. The fact that we have a foreign debt is a clear indication that we are regarded as a credit-worthy nation, that those who lend us money are confident that there is a future for our economy. Consequently, I would not be too concerned about our foreign debt. Instead, I would be concerned with putting people into productive employment. I might add that even West Germany which was the strongest economy in Europe now finds itself in the red. One must borrow in order to expand whether one be in farming or in some other business. If an industrialist is to provide jobs he must have the money first but if he is not able to obtain the money from a lending agency he has little hope of expansion. The austere policies being followed by this Government will not achieve anything other than a lowering of living standards, the creation of greater depression and the killing of confidence among the people.

The previous speaker referred to the levy on banking and said that Deputy Flynn was concerned for the bankers. That is not so. Deputy Flynn said that the Government introduced the levy by way of a sop to the Labour Party who have been talking for years about nationalising the banks. Incidentally I am surprised that there has been no speaker from the Labour benches so far in this debate. I hope that the Press take note of that. The banks are not worried about that 5 per cent levy. They will get it back by way of levying increased charges on their customers and they have increased charges twice since the levy was introduced. Surely there is somebody in the Government who is level headed enough to realise that.

This Bill fails to set out anything new as to the prospects for this nation. It is regrettable that there is no sign of any positive action being taken that would give back confidence to the people and thereby help them to face the long winter ahead. The whole situation is very sad indeed for our people who have been through so much in the past 50 or 60 years. Let us not forget that we were on our knees between 1916 and 1923. There has been a long revival since then. Surely we owe it to those people who have made such sacrifices in the past to continue on the road to progress. This is not progress. Nothing in this Finance Bill would indicate that the Government are concerned about progress. I do not know what has got into their heads. As a Fianna Fáil Deputy I expected more from this Government. I expected some type of organisation and planning and nothing whatsoever has come. Am I to assume that there will be millions and millions surplus at the end of this financial year and that all the goodies will be handed out next year? Why are they preaching gloom, gloom, gloom all the way? Surely it is their responsibility to introduce confidence at present, to boost the morale of the Irish people which is so low at this time. I never saw a new Government become so unpopular so quickly, and I am glad to say that many of our political correspondents and commentators realise that fact. The Government, for the sake of the people must change course if necessary now; otherwise they will lead us down the path of no return.

Mr. Coveney

First of all I hope I will be permitted to say a few words about a number of points which Deputy Keegan made. He brought a smile to my lips when he pointed over there at the "real Taoiseach". I have grown up in a city where there was only one real Taoiseach and the real Taoiseach might well be here if they had not ditched him. That comment——

Mr. Keegan

His successor must occupy that seat now.

Mr. Coveney

Anyway, they got rid of that decent man. I listened with great interest in January or February 1980 to a television address of the new leader of the Government at the time, and I did not expect to find myself here at that time. I felt that that man had impeccable qualities to deal with the economic problems of the country. His speech on television was not unlike the sort of speech which Deputy Bruton has been making from this side of the House on the need to get our finances into some kind of order. I am not criticising that man in particular but I just do not understand what he was about. He said the kind of things that the country was ready to listen to. He had two-and-a-half years of which he could have afforded 18 months of the kind of unpopularity which we now are faced with, and I will never know why he did not take that opportunity. However, that is history and I do not want to dwell too much on it.

Deputy Keegan mentioned a few things on which I would like to comment. First of all he talked about our manifesto, our programme, which he said we were reneging on. Our manifesto is a programme for government for four years, not four months. It is ludicrous to suggest, whether in good times or bad, that any Government could deliver on all their commitments in four months. He went on in an interesting speech to talk about economic planning, despite the fact that his Leader was the one who abolished economic planning in that he abolished the Department of Economic Planning and Development. We are in the business of re-introducing economic planning and we have set aside a Ministry of State to do just that. I find it difficult to follow the logic of some of the Deputy's comments.

He spoke also about militant farmers and the fact that they do not now seem to be as militant. I am sorry to have to tell him that about 1,200 of them will be in the Cork Opera House tonight and they will be very militant.

Mr. Keegan

I hope so.

Mr. Coveney

I am afraid they will be, but I do not think that they will be suggesting for one moment that all of their misfortunes have arisen out of the actions of a Government four months in office. Again we have to take some kind of time perspective when we are talking about this Finance Bill and the economic factors that gave rise to it. I agree with the Deputy on the question of the mess of farm taxation that successive Governments have presided over. My constituency is not predominently rural but there is a rural arm to it. A number of farmers have phoned me and said, "Can anything be done about this crazy situation where I have to pay £500 or £600 to a chartered accountant to tell me what I already know, that I could not possibly be liable for tax?" I accept those comments and this is something we must deal with.

The idea of this Government being accused of presiding over the abolition of the IDA certainly needs to be dispelled. The Deputy knows, I hope, that his Government initiated a study by a firm of consultants on the efficiency and performance of the IDA. That was a good thing to do. Since the change of Government that report has come through and our Government must and should look at the result of that to see whether the IDA needs to be revamped or strengthened. Certainly it is not to be abolished. It was our party who started the IDA in the first place. We believe absolutely in the function of the IDA and it has done a tremendous job. I do not think there is any disagreement in this House about that. If anyone were to suggest that we were going to abolish the IDA I would have said that that is not so. Nothing could be further from the truth.

Reference was made to the scheme to combat poverty. Again, we have appointed a Minister of State to deal specifically with that subject, but we must have some time. The previous combat poverty programme had much to recommend it. It was a pilot scheme. The results of it need careful analysis and clearly it cannot be reinstituted in a matter of a couple of months, but it will be reintroduced.

A rather cavalier statement was made about the foreign debt which I found a little frightening, particularly when it was followed by a comment about now reaching the bottom of the well. I would have thought the two things were contrary in the emphasis put upon them. I am sorry to dwell on those things but it is only fair that some of the comments made across the floor should be commented upon in a fair way, and I hope I have been fair about it. Some measure of the debasement to which politics has sunk is that almost anything said by politicians tends to be regarded by the public at large— in my experience anyway — as either blatantly partisan or at best highly suspect, and that may well be the case all over the world. However, it presents problems when we are in the real difficulty of trying to get across to the public in a fair way what the economic state of the country is and the response of the Government of the day to that condition. No Government, certainly not a Government who have a nil majority, would willingly enter on the kind of rescue operation on which this Government are embarked at present. Unfortunately, it seems that we have no choice in the matter, and if the party now in Opposition were in government I doubt very much whether they would have much choice.

At the risk of repeating over and over again the kind of statistics about which no great doubt arises, it is important not so much to talk about the statistics as to talk about a comparison with comparable countries with which we have to live, namely those in the EEC. On three of the main criteria, balance of payments, current budget deficit and our national debt, we are in a serious position relative to our neighbours in Europe. In 1978 our balance of payments deficit was £200 million and this year it is estimated it will reach a staggering £1,400 million. In percentage terms that places us at the bottom of the nine EEC countries. Despite the measures which were taken in the budget our current deficit is estimated at £787 million, or practically 8 per cent of GNP.

Some of our European partners have no budget deficits. Even the next worst to us, Belgium, has a rate which is half ours. The figures, although mind-boggling, are less important than our relationship with our neighbours and our trading partners in particular. This morning we got a copy of the NESC Report. By any standards that is as authoritative a document as there is. It hammers home the same message, which the Government believe and which the Opposition apparently do not, that we are in a perilous position. It says the council's principal recommendation in Report No. 53, which was last year's report, was the elimination of the current budget deficit over the three-year period from 1981 to 1983. It goes on at some length about that subject; but, by and large, it is the same message as this Government are trying to hammer home: that we simply have no choice but to take unpopular measures in an economy that is in a perilous position. It is against that background that the budget has to be viewed.

I wish these statistics were exaggerated, but they are not. The underlying trends simply have to be reversed and the Government have to take a number of unpalatable and unpopular measures. It is ludicrous to suggest that these measures amount to nothing more than monetarism or Thatcherism. It is equally untrue to state that this Government are not prepared to borrow heavily. They have no choice. However, we must reduce and ultimately cease borrowing for day to day Government spending; we must work towards the elimination of the current budget deficit. I believe that fair-minded people on all sides of the House are not in disagreement with that. There was a very interesting interview in the Sunday Press with Deputy O'Malley in which he said he considered it one of the primary tasks of the Government to eliminate the current budget deficit over the next couple of years.

We face a series of extremely difficult options and problems. We have the daunting task of bringing the nation's finances under control while at the same time reversing unemployment, reducing inflation, increasing competitiveness and protecting the socially and economically deprived. That will be a difficult task. I believe it will take nothing short of a real national effort, as well as a major improvement in the international climate, to bring about that result. We have no influence over the international climate but we can do something about our own affairs provided we show restraint and moderation and perhaps a lowering of our expectations in the short term.

One of the first tests of our resolve is in the area of national wage agreements and what might replace them. Already we have seen that the social partners have fired their fairly predictable opening shots. For the first time in many years they appear to be poles apart and a basis for a national wage agreement looks very difficult, if not impossible. However, I believe there is a fairly widespread appreciation throughout the community of the need for some restraint in the present economic climate. This appreciation will quickly disappear if equity and fairness are not perceived in the spreading of the burden throughout the whole community. The kernel of the problem is to find a method which is not only fair but is seen to be fair. That may require the wisdom of Solomon but it is a matter for the Government to try to convince people about the fairness of the measures they are taking. It is not on to suggest to wage and salary PAYE earners that they should moderate their demands if other sectors, which are more difficult to monitor, appear to be unaffected. The challenge to the Government is to be seen to be bringing about a fair sharing of the burden. It is a very difficult task but I hope it is not impossible.

In my private capacity I am a professional quantity surveyor. I run a private practice and architects, consulting engineers and so on operate in the same field as I do. We normally charge fees on the basis of a percentage of the cost of a construction project. That means, in effect, we are virtually inflation proof because, when building costs go up, we usually charge a fee on the basis of the final cost. I suggest to people in that sector that it would not be unreasonable for the Government in the present climate to say to people in the building industry that in the foreseeable future Government contracts should pay fees on the basis of tender figures, not final costs. That would be a contribution towards lowering inflation and accepting a certain level of moderation, or practically freezing in a sense one's expectations in the short-term. The whole area of monitoring restraint in business without interfering with enterprise and with people's incentive to invest must be tackled if the PAYE sector are to accept that there is a fair level of burden spread across the board. In the coming weeks and months it is vital that we all address ourselves to the problem of a reasonable wage settlement throughout the whole community. If we do not get that we are going to lose more and more jobs and our competitiveness. Our industry will be put at risk and we will be in a much more serious situation than at present.

This morning my colleague, Deputy Lyons, said he was getting a very depressing feedback from his constituency about the state of the nation and the Government. I suppose that is par for the course. I find an amazing resilience among people. They know we have a difficult job to do and that the state of the economy is worse than it has been for many years. They do not like what we are doing but they accept that it must be done sooner rather than later. That is the predominant feedback I am getting. Other public representatives might get the reverse.

The Deputy said that industry was in a sorry state as a result of our couple of months in Government. We look to the Government to handle national finances in a prudent fashion, to tackle inflation and the underlying difficulties in an economy which has over-borrowed and is facing enormous interest repayments. Business confidence will not be restored until that job is done and that is what we are about. Methods of doing that job are obviously open to debate, but the principle, surely, is not.

There is no doubt that agriculture is in dire straits at present. It is not fair, however, to suggest that that has happened in the last four months or, to be fair, in the last two or three years. The real problem has nothing to do with agriculture itself, it has to do with inflation. Costs and prices are going up because of the inflation rate. That is the problem in agriculture which we must tackle. If in the next two years we do not get inflation down to a manageable, single figure, no amount of props or grants will save agriculture. This, or any Government, must tackle inflation and the main underlying economic problems of gross over-borrowing, over-spending in the public sector and continual fuelling of inflation. These are the problems which Minister Deputy Bruton, has bravely and courageously faced in the budget.

Deputy Lyons and Deputy Keegan mentioned a serious depression in the construction industry. I have worked in the construction industry. It has been in recession for a couple of years, there is no question about that. It is no better now than last year, but it is no worse. There is a major commitment by this Government to productive capital investment in the construction industry. The most recent evidence of that is one of the largest construction projects ever undertaken in this State, the Cork-Dublin gas pipeline.

Mr. Gene Fitzgerald

With which I am au fait. I am sorry for interrupting.

Mr. Coveney

Not at all. Another interesting development — the largest urban renewal ever undertaken — is about to commence in the centre of Cork city. It involves half a million square feet of shopping, car parking, hotels, offices and so on. The developer is banging on the door of Cork Corporation, asking for planning permission. If that is not long-term confidence in the economy and in the building sector I do not know what is. We should not be too depressed, nor should we be complacent, about the state of our construction industry. It is not at anything remotely approaching full capacity and has not been for a number of years. However, this Government are not about to preside over its destruction, far from it. Our hope for the future lies in the freeing of funds spent on day to day expenditure so that they can be put into major capital infrastructural projects which will benefit the construction industry and the country.

Some comments were made about unemployment. A number of speakers from across the floor have commented on the apparent contradiction between the desire of this Government to create employment and the imposition of a freeze in public sector employment. One does not need to be a genius to know that unemployment cannot be solved by creating more and more public sector employment. If only that would work it would be a panacea for all politicians. The great majority of Government services do not earn revenue and must be paid for by the taxpayer or by Government borrowing. We are committed, and rightly so, to the reduction of the current budget deficit. It logically follows that we cannot continue to increase the wage bill of the public sector. It is a crude mechanism to simply chop off finances. There are, clearly, areas of real need. Presumably, in the fullness of time, these must be analysed carefully. We cannot open a floodgate of expansion in the public sector in the erroneous belief that that will solve the unemployment problem. It will do the reverse. If we do not free our meagre funds to be spent on real job creation, on the creation and expansion of infrastructure and industry—jobs which, in themselves, have the power to recreate more jobs, we will not solve the unemployment problem.

Regarding the national understanding or wage agreement or whatever replaces that, competitiveness in our industry has, for the first time, become a serious worry. When we entered the EEC, and particularly when we joined the EMS, we had a fairly distinct cost advantage in our price structure. One of the many advantages advanced for joining the EMS was that it would somehow force us to lower our inflation rate in line with the lower inflation economies of Europe. We have not done that. Between 1978 and 1981 our wage costs have risen by 25 per cent more in real terms than those of the EMS countries. There has not been a corresponding increase in our productivity relative to that of the EEC countries with which we trade, which is a serious matter. For example, in the Netherlands for the past 12 months prices have increased by only 6½ per cent and wages by 1½ per cent; In Germany, prices have increased by 6 per cent and wages by 5 per cent; even in Britain the inflation rate has dropped to 11 per cent. While we are not a country which pays high wages—far from it, we are amongst those who pay the lowest wages — in terms of the combination of wages and productivity we are, nonetheless, getting badly out of line, which will inhibit the essential expansion of our industry and our ability to sell our products. It is as basic and fundamental as that. That is a national discipline which we do not, and will not, easily accept but which we must accept if we are to create jobs which we, above all the countries of Europe, uniquely need.

I do not find many of the measures in the Finance Bill palatable, nobody does. However, these must be seen against the background of a very difficult economic climate and an essential attempt to get our finances into a position from which we can expand and grow. The message must be got across, in the midst of that gloomy summary of the position, that there is a reason and a purpose for what we are doing, that above all there is a light at the end of the tunnel. Irish people are not fools. This is not the first time they have been asked to make sacrifices. They have, in the past, made much bigger sacrifices. With prudence, understanding and moderation, we can come through this difficult time and look upon it as simply an interruption of our forward progress. Unless we take the difficult, unpopular and essential measures to get our economy right for growth and future prosperity we will never know that growth and prosperity. That is what this Government are about.

Mr. D. Andrews

I would like to congratulate the previous speaker on his maiden speech and wish him well in his political career. However, the reality of his speech is another matter. While I agree the situation is one of gloom, there is also a feeling of hopelessness in the country. People are confronted daily with internecine strife between the Coalition brothers. From reading the newspapers one gets the impression that the Government are settling the arguments between the socialist and conservative partners. We have the Coalition arguing and presiding over an economy in drift, but apparently doing very little to control the situation.

Coming from an urban constituency I know that one of the strongest complaints is in regard to increasing prices. The average housewife gets a weekly allocation for the household budget but inevitably she must go back to her spouse—or to the "kitty" if she is working—for more money. Consequently she cannot budget. If a husband or wife goes to the supermarket he or she will find that a product which cost 20p last week can be 25p this week. This means there is a very big percentage increase in the family budget each week. This is one area of complaint where the Government are not doing anything to control prices, particularly at supermarket level. I am not suggesting supermarket owners or shopkeepers are dishonest, but this is an area over which the Government should have control and should give a lead in relation to the ever-increasing cost of living.

In their recent budgets the Government attacked the motorist. Five years ago—and it is on the record of this House—I said the car was no longer a luxury but a necessity, especially in this city where public transport is seen to break down daily. On every road one finds a CIE bus broken down with the result that people must provide their own transport. That is a reality. The motor car is an necessity in getting from A to B.

Petrol prices are increased monthly, road tax has been re-introduced and VAT on cars is 25 per cent. This is outrageous. Today I raised a question on road deaths and road injuries and I will continue to raise this issue as long as I have the privilage of serving the people of Dún Laoghaire. By increasing the cost of car parts we are frightening people from keeping their cars in proper order. There has been a considerable increase in the number of defective cars on our roads because people cannot afford to replace defective parts—for example, bald tyres. The cost of tyres increased by 25 per cent. All these increases have been introduced in the space of a few weeks, compliments of the Government. The price of petrol has jumped. People who would use public transport cannot do so because it is not available. I am speaking now for the people in the city and county of Dublin. This is a catch 22 situation. There is very little public transport and people must provide their own, with the result that public transport cannot get from one end of their route to another because of the number of cars on the roads. The roads and streets are choc-a-block. One has only to leave this House between 5.30 p.m. and 7 p.m. to experience what I am speaking about.

The sooner this Government recognise that the motor car is a necessity the better. They should give the motorist a break. They stand accused of economic terrorism. The people are terrorised by their attitude to ever-increasing prices. House prices are increasing unabated. One of the most insidious features of private house purchasing is penal stamp duty. The Government sit back, do nothing but take a percentage of the sale price by way of stamp duty. This mean, penal, unsocial and unjust tax should be abolished.

Price control under this Government is a joke. The housewives are bamboozled and suffer shocks because of daily price increases, but nothing is done by the Government. Almost every day we hear on the radio of price rises. That brings me to the inevitables—beer and spirits. Is it really necessary for successive Governments, and this Government in particular, to harass the decent pint drinker? Is it reasonable for the Government to harass the publican? People who condemn publicans should remember that they have families too and are entitled to sell their products at a reasonable price. What are the present Government doing? They are pricing the publican out of business.

The pub is part of the community. We congregate there for an hour or two each day. I do not think that is unreasonable. I am talking now about the social drinker. In the city and county of Dublin, according to representations made to me in the matter, the publican is being priced out of the market. The Government's policy in relation to price increases is counter productive. They are pricing cars out of the market and pricing the drink of the average man off the counter. The result is that fewer people are drinking and consequently there is less revenue for the Government.

I should like to take this opportunity of wishing every success in his new position to Mr. Joe Malone, the former director general of Bord Fáilte. He did an excellent job and I would describe him as an economic patriot. He gave much of his time to the introduction of millions of people to the advantages of this country. Just before the general election I met a group of hoteliers in my constituency who were very upset at attitudes to their industry. They wished to be treated for grant purposes as the IDA treat enterprises which approach them for grants. The hotel industry is fundamental to the economy and gives a great deal of employment. It also gives a lot of tax to the Exchequer. This is one of the matters I intend to raise during the lifetime of this Dáil.

I now refer to the abuse of unemployment asistance. I find the word "dole" an offensive four letter word and feel that this payment should be called by its proper name. There are certain areas, such as the west, where unemployment assistance is badly needed as a supplement. It would be unjust to envy these people their entitlement to unemployment assistance. There is, however, abuse of the system The majority of people receiving it are no doubt entitled to it but there are some who see unemployment assistance as fair game. It is an evil point of view indicating an evil mind. Unemployment benefit is entirely different in that it is obtained by people who have earned it through their contributions. The abuse of unemployment assistance is a social crime and those engaged in it should be treated as offenders against the weaker sections of the community. They are just as guilty of thieving as someone who steals from an old woman or takes money from a bank. Those engaged in it should be exposed.

This Finance Bill represents the implementation of the first stage of the Government's economic strategy. Much has been said about the Government's counter inflation programme, but it is fair to say that their actions during the past few months have added 5 per cent to the cost of living and pushed the rate of inflation from 17 per cent when Fianna Fáil left office to 22 per cent.

One is amazed at the Government's surprise on the breakdown of the national pay talks. We must all be responsible in relation to this matter and political capital should not be made of it. A successful outcome to these talks is in the interests of economic stability, but it is very difficult for trade union leaders to accept a pay pause when the wives of their members are being asked to pay massive increase in the price of food. Income has been so eroded during the past three months that it is not unreasonable to say that paypackets should be adjusted accordingly. That would appear to be economic logic, but Government speakers say that the country cannot afford it at this time. Apparently it is a question of forcing people into making false economies. There are certain families who have not had a square meal during the past few months because of the necessity to cut back on food bills. This is false economy and part of the terrorism of which I accuse the Government. Some people may think this is a funny point of view but it is a very serious matter which we will continue to expose.

There is another matter to which a number of Government speakers have referred, not least Deputy Richie Ryan who, when Minister for Finance, had a difficult task to perform and did not create for his policies a great reputation. It is very difficult position to fill and is probably made even more difficult in the present economic climate. May I ask the Government to reconsider their attitude to this £9.60 which they allege will make the average household so much better off once a week? I do not think any Member more than I would like to see more money going into the handbags of housewives or the pockets of their husbands, but it is clear to me that the sending out of 300,000 cheques of £9.60 will not make any household any better off. Others more able as economists will tell about the estimated administrative cost of this, and we must remember that this is being done at a time when the Government have frozen recruitment to the civil service.

This is a false, dishonest gimmick. The husband will be paying for it in his income tax, so what the husband is giving the Government are taking and handing to his wife. There are many other reasons why this gimmick should not have been introduced, but of course it is not a matter for the Opposition to be making a case why the Government should not be giving money to the electorate. This is my point of view, and it might get me into trouble with my party — I do not think it will and it should not. I suggest that the Government should have another look at this irresponsible gimmick. It must be exposed as such. My belief is that the majority of the people whom the money is aimed at see it as a gimmick, as an economic falsehood. I am asking the Government to have another look at this in that light, particularly since they have frozen recruitment in the civil service, and the people who would administer this piece of gimmickry have already indicated that they have not sufficient personnel to administer it. It would take hundreds more people to issue 300,000 cheques per week. It may be 350,000 cheques per week, but give or take the odd 50,000 it will present a major problem for the economy.

I should like to repeat Mr. Kieran Kennedy, the director of the Economic and Social Research Institute, at the recent conference, attended by the Taoiseach, on Irish society and the economy in the eighties. Mr. Kennedy said that unemployment figures up to June 1981 had risen less fast than in most other EEC countries: they rose by 27 per cent here by comparison with 60 per cent in Britain and the Netherlands and 44 per cent in Germany. In May and June, he said, unemployment showed signs of stabilising, but now it has begun to rise because of the Government's deflationary policy. He said the Government had frozen jobs in the public service and had put the whole burden of job creation on the private sector. If, as the Taoiseach said for the first time at the weekend, the creation and preservation of jobs are the Government's first priorities, why has he frozen the creation of posts in the civil service; why has he reduced the number of teaching posts in primary schools and in teacher training colleges?

I do not have to give details of the hardships and miseries caused by unemployment. There is a feeling of drift and helplessness throughout the country, as well as hopelessness. The Government have not shown any leadership in respect of fundamental, almost constitutional, human entitlements. A man was entitled to a job. A woman is now entitled to a job, and why not? The disemployment of the husband, the primary income earner, presents all sorts of problems for a family. I often think it leads to family breakdown. Therefore, the Government are not only adding to the breaking up of families but they are contributing to the demoralisation of husbands who feel less than men when they are not able to come home to their wives and families with the dignity a wage packet confers. Why can the Government not do anything more? There must be something they can do other than giving unemployment benefit or assistance. Something more must be done to maintain the dignity of the heads of families. The Government seem to think that coming home from the labour exchange with unemployment benefit or assistance is a substitute for jobs.

A matter which upset me very much during the summer holidays was the Government's announcement of the closure of the Tuam beet factory. This has nothing to do with my constituency. However, we are national politicians and, though our primary function is to legislate instead of to mediate, certain things are done outside one's constituency which one regards as anathema to the principle of social justice. Apparently the Tuam factory is not up to the standard required by economists for survival, but would the economists who are presiding over the death of the Tuam factory — the Minister for Agriculture must take the final decision — take a look at what the closure of the factory will cost, the hardship it will cause in that area? We are talking about the west of Ireland. We are not talking about a factory being closed at Shannon where there are many, or of factories that can be closed down anonymously in the industrial estates on the outskirts of Dublin day after day. We are talking about a desirable social policy for the west of Ireland. I genuinely appeal to the Government to reconsider their attitude in this case. They are putting decent people out of work in a part of the country which is underpopulated.

An Leas-Cheann Comhairle

The Chair has given the Deputy an opportunity of making what it regards as a passing reference to the Tuam problem and would be hoping that the Deputy would not wish to develop it at any great length because it would not be appropriate here.

Mr. D. Andrews

I am asking the Government, as a matter of social justice, to adjust their philosophy. I am basing their apparent lack of philosophy on their decision to close the Tuam factory. I am asking for a reawakening of the old Sinn Féin philosophy, the philosophy of the first Republic. That is what we should be reawakening. I appreciate the latitude the Chair has given me but I appeal to the Minister for Agriculture who is present to have another look at that matter. It would be a move in the right direction. Economists are not infallible although they have become the social soothsayers of our time. If one asked ten economists to give a point of view on a common subject they would give ten different points of view. The attitude of the economists to the Tuam factory is all wrong, as is the advice the Minister received, as a matter of social policy and social justice.

Another indication of the Government's lack of social conscience is their decision to increase the VAT element on school books from 10 to 15 per cent. Why should education be taxed? I am talking about successive Governments. This is a matter that must offend all Members. It certainly offends my attitude to education. I have children but I am not making any special case on their behalf or engaging in any special pleading. I am raising the subject at the request of the many people who brought it to my attention. I would not like it to be suggested that I am engaging in a special pleading, quite the contrary. I am asking the Government, and the Minister for Education in particular, to deal with this matter. The Minister for Education appears to be a reasonably energetic sort of person, albeit energetic in making certain wrong decisions. Nevertheless, he appears to have a high public profile. I should like to ask him to make that one of the planks of his platform. He should work towards the abandonment of value-added tax on school books. It appears to me that there is no economic sense in the existence of such tax on school books.

In national schools some parents cannot afford to buy the books and they must go, cap in hand, to the decent teacher who gives them an undertaking that they will not have to pay for the books on the basis that the health board or the local authority will pay for them. The main reason for this cap-in-hand-syndrome is the VAT on school books. Education should not be taxed. Certainly, the tools of education should not be taxed and I regard school books to be very fundamental to learning.

Another element I said I would bring to the attention of the House is the problem of youth unemployment. In this regard we seem to be directionless. There have been sounds by the Government recently in relation to this matter but yet the number of unemployed young people continues to grow. If we continue to leave our young people unemployed we will cause a serious problem for the country. I am concerned with those between the ages of 18 and 30. We must bear in mind the opportunities young people have for going astray in present conditions. The fact that more of them have not gone off the deep end is an indication of their discipline. They must cope with the problem of drugs and other social problems which are becoming a real threat to the stability of the community. Unless we, the present generation of legislators, can provide the next generation, our children, with employment we are doing the nation a great disservice. It is the Government of the day who are to blame for not providing jobs for young people. Young people without jobs are very open and defenceless and subject to all sorts of unreasonable threats. In some instances they succumb to them. The reason they do so is because they do not have jobs. I appeal to the Government to do something about that part of their programme. That programme becomes less of a reality daily and more like something out of Alice in Wonderland. The document has become a piece of unreality and I cannot see the Government implementing their so-called great programme mainly due to their lack of direction.

I should like to make one final point based on the report, Economic and Social policy 1981, Aims and Recommendations, produced by the National Economic and Social Council. An interesting paragraph in that publication states:

The forecast current budget deficit, at 7.9 per cent of GNP, is the largest ever recorded and the forecast balance of payments deficit on current accounts at 13.8 per cent of GNP is the largest recorded since 1951. The deficit on current account will be largely financed through official external borrowing by the Exchequer and by the State-sponsored bodies. New official external borrowings will amount to £1.15 billion in 1981. The end-year external debt is likely to reach £4.3 billion—a 40 per cent increase during the year. Given the output environment, total employment is unlikely to show any significant increase in the twelve months from April 1981 to April 1982.

The Coalition will have been in power for most of that period, if they survive. I should like to ask the Government to take note of what has been said today. They are guilty and stand accused of economic terrorism and their tactics are forcing people into situations which are becoming untenable. In the final analysis they must take responsibility for this.

Minister for Agriculture (Mr. Dukes)

We are talking about a Bill which implements the budget strategy we brought before the House last July. In talking about the Bill it would be useful if occasionally we were to look at what that strategy consists of and what its aims are. It is ironic that Deputy Andrews, who has now left the Chamber, should have read out what must be in everybody's eyes one of the major indictments of the previous Government's policy, the statement that the current budget deficit this year will be at a record level. I should like to remind the House that had we not acted last July in the way we did the current budget deficit outturn for this year would have been even higher than the level now expected and we would be entering next year with an opening deficit which would exceed even the record levels which the publication Deputy Andrews referred to outlined. That is the essential nub of the problem.

Deputy Andrews and some of his colleagues on the Opposition benches have been amusing themselves recently—and I suppose in a way it is harmless amusement—with various fly remarks about economists. I wondered, listening to Deputy Andrews, and to Deputy Killilea the other night, if Deputy Martin O'Donoghue was listening to them since he is one of that profession who played no small part in bringing Fianna Fáil to power in 1977, if what we are told is true.

Mr. Gene Fitzgerald

The Minister should not take it personally.

Mr. Dukes

I am not taking it at all personally. I am coming to the point which, perhaps, the Deputy might have some interest in. It is that the science of economics, whatever about the persons who practice it, is available only as a means to help policy makers make decisions, whatever the field they are involved in, whether it is Government or private enterprise, farming or any other area. It is in particular an instrument to help them to make decisions about the allocation of scarce resources. That is a matter in which the previous Government were lamentably inexpert, because to a great extent their policies consisted of trying to fool people into believing that resources were not so scarce after all and that, even if at national level our resources were somewhat scarce, we could always borrow abroad.

We have had this debate in this House already and no doubt we will have it again. I want to make the point in the context of this debate that of course there is nothing inherently wrong in borrowing. Indeed, for a country such as ours there is a great deal to be said for borrowing in order to build up our productive capacity for the years ahead and to build up our capacity to employ people in this country, to employ our own sons and daughters, our own young people, to maintain employment for our people in our country. But when we get to the point where a large proportion of our borrowing is being incurred in order to finance current expenditure which is not creating revenue earning capacity, which is not creating productive capacity and which is not creating the potential to employ new people in the years ahead, then it has got seriously out of line. That is the situation we were faced with on taking office last July and that is the situation which our budget strategy was aimed at redressing, because at the end of the day there is only one pocket the money can come from, at the end of the day there is only one group of people who can pay for the things we want to do for our underprivileged people, for sectors in difficulties, for our farmers, for firms closing down, for people who have not got jobs, for people who have not got access to medical services. There is only one group of people who at the end of the day can pay for all of that, and that is ourselves. There is nobody anywhere else in the world who has got free money in order to enable us to do all these things. If we borrow to do those things we must make sure that we use that borrowing in a way which allows us to increase our own capacity to repay the borrowing. It is rather ironic that Deputy Andrews should have put me on this track and reminded us of the basic problem that we are facing.

Coming to the more particularly agricultural aspects of the budget, I would point out, as I did last July, that in a budget in which we reduced total Government expenditure we had to provide extra spending in the agricultural sector and we also provided—it was submitted to this House and accepted last July—a Supplementary Estimate of £35 million for my Department. Between now and the end of the year—quite shortly, in fact—we will come forward with a further Supplementary Estimate for my Department to provide the finance necessary to keep going not only the schemes which were in operation when we took office but also the new schemes which we have introduced in the meantime and which were designed to deal with some of the aspects of the serious farm income problem we face. I would make the point that provision of extra funds for the agricultural sector in a budget in which we reduced the total amount of Government expenditure below the level it would otherwise have reached can only be seen as the very clearest indication of this Government's commitment to rectify the serious problems that we now have in the agricultural sector.

Mr. Power

Did the Minister say he would keep going the schemes that were in existence?

Mr. Dukes

In answer to the Deputy's interruption, we have had to provide £35 million in July and a further sum of money between now and the end of the year to make up for what was not provided for in the budget of the last administration at the beginning of this year, because the provisions made in that budget were not sufficient to cover the expenditure that would have arisen under the programmes which we inherited at the change of Government.

Mr. Power

The grants which were inherited under the Farm Modernisation Scheme were too great.

An Leas-Cheann Comhairle

I would ask Deputy Power to withhold his comments. He will have an opportunity later on to make them.

Mr. Dukes

If the Deputy will have a little patience he will get an answer to the questions which are obviously burning him up at the moment. There is no doubt but that we did not make the money available only in regard to Kildare. Some of the measures we took in the July supplementary budget have been aimed at dealing with some of the problems in agriculture and indeed at offsetting the effects on agriculture of some of the measures which we were obliged to take in the July budget. One example of the latter category is the fact that we have increased the flat rate pay-back in respect of VAT to farmers from 1 per cent to 1½ per cent. The difference between the two is equal to the extra charge that would arise for farmers in this year, and indeed over the whole of next year, from the fact that some of their inputs now bear a higher rate of VAT than they did previously. This increase in the flat rate pay-back is designed to ensure that extra VAT, which is not intended to be a tax on production, does not fall on production. That is the reason we have increased the flat rate pay-back. In addition to that, and in recognition of some various specific difficulties which have been found in the agricultural sector for some time past, we have reduced the rate of VAT on contractors' charges from 10 per cent to 3 per cent, a measure also provided for in the Bill before us. This is a measure which will relieve farmers of some of the burden of harvesting charges, preparation charges, sowing charges and so on, because at the end of the day the bill which the contractor would have to charge the farmer would be reduced compared to what it would have been had we not made that change in the VAT rate.

Another measure which we have provided for since coming into office is a substantial increase in the sheep headage grants in the disadvantaged areas and in the designated sheep areas. We have increased the subsidy to £9.50 per ewe for the first 150 ewes in the flock to £6.50 for each of the next 50 ewes. That is a measure which will have a very substantial effect on farm incomes in those areas. Although not being directly designed as a measure to aid production, because it is paid under the Disadvantaged Areas Scheme, which is basically an income transfer scheme to the disadvantaged areas, I would think nevertheless that one of the effects of it would be further to add to the confidence which exists now in the sheep industry and I would hope that it will assist in securing further expansion in that area.

We have provided also in this year funds to operate here the EEC scheme of interest subsidies for developing farmers. Our estimate is that the total cost of this measure this year will come to some £5 million. That subsidy is payable on foot of interest payable on loans outstanding for investments carried out under the Farm Modernisation Scheme. All of those who are now working on plans drawn up under the Farm Modernisation Scheme, the development farmers who are working on the basis of those plans, will qualify for that interest subsidy to the extent of taking out loans and there are amounts outstanding in respect of loans for investment activities eligible for grants under the farm modernisation scheme.

It is also my intention to bring forward in the very near future a parallel interest subsidy measure which will apply to farmers other than developing farmers, farmers in the commercial category, broadly along the same lines for the same kind of loans so that we will have the same kind of measure applying to the non-development farmers as we have under the EEC scheme for development farmers. Those two measures will provide a substantial relief for many of the farmers concerned who are now having some difficulties in meeting repayments on loans they have taken out for farm development.

It is not my contention — it would be idle to pretend otherwise — that these schemes will solve the credit problems being encountered by farmers. That is certainly not the case. There is a substantial number of farmers throughout the country whose problems in relation to the repayment of development loans of one kind or another are so big that the interest subsidies I have just mentioned, the EEC scheme and the parallel national scheme, will not meet their problems. A different approach is required in the case of farmers who find themselves in that position. I am working on this matter at the moment. We are having consultations with the lending institutions. I hope before long we will arrive at a series of measures which will allow positive action to be taken in the case of farms which are essentially in a viable situation but because of the rapid increase in interest rates in recent years now find themselves in a position where the interest burden of development loans is not currently bearable.

All of these measures are designed to respond to problems which have not simply emerged this year but which go back some time into the past. There has been a series of developments which have brought us to the point where we now have a serious farm increase crisis. We have had, on the one hand, rapid inflation for a number of years which inevitably has had its effect on the level of farm imput costs. In addition to that, that rapid rate of inflation has put pressure on the living costs of farm families just as it has put pressure on the living costs of families involved in every other sector of economic activity. We have had a slower rate of price increase in terms of the prices realised by farmers for their products than the rate of cost increase so that we have had a classic cost price squeeze in the farming sector. We have also had the factor I have just mentioned, a rapid rise in interest rates. We now have a situation where difficulties in farming have been compounded by a cost price squeeze and a situation in which rates of interest now payable on development loans are far higher than the rates of interest prevailing when those development loans were taken out. I am sure Members of the House will appreciate that a plan which is profitable and economic when money is available at 10 per cent or 12 per cent rapidly loses its profitability when the cost of that borrowed money increases to 17 per cent or, as we have seen in some cases lately, to almost 20 per cent.

That situation is not one that has emerged only this year. It has been building up for at least two and a half years. It has certainly been building up for the two and a half years during which farm incomes have been declining in real terms. In 1979 and 1980 taken together we had a 45 per cent reduction in overall farm incomes in real terms. That is looking at the situation before any adjustment is made to take account of the cost of servicing debt for farm development. It would be idle and misleading on my part to try to pretend that that situation can be resolved in a very short time. It certainly cannot be resolved in the space of a few months. The measures we have set out in our programme are designed to counter that problem and to alleviate parts of that problem. We will continue with the implementation of those measures.

Some of those measures have been set out in the programme for Government. Those which will come most immediately to mind are the incentives we have provided for in that programme for re-stocking. There is a subsidy of £100 on each additional calved heifer in herds in June next year over and above the level of June this year. I hope to be able finally to announce this in the very near future. That is one of the measures we propose to take. It is designed to help restore confidence in farming and in bringing back into focus the basic point which all of us need to bear in mind when looking at our agricultural problem, which is that the whole economy of the country needs buoyancy in agriculture and that measures we can take in order to put buoyancy back in to agriculture, in order to restore the level of confidence in agriculture, are ones which are vital not only for our farming population and for the population of our rural towns but vital for our economy as a whole because so much of our industrial fabric is bound up in one way or another with the business of farming.

We will proceed to implement those programmes and in addition we will continue with the efforts we are making to have specific measures adopted at national level and at the level of the European Community, which will respond to our problems and, even more importantly, we will continue in the efforts which have been carried out in recent weeks by the Minister for Foreign Affairs and by myself to ensure that there are no changes in agricultural policy at European level which would be detrimental to the basic interests of this country. I am sure in that particular respect the procedure we are following, the view we are taking, the points we are putting across are ones which would have the agreement of all sides of the House because I believe we all recognise that a continuation of the kind of policies which we have been accustomed to and which we have built our system to respond to in relation to agriculture are important for the well-being of our agricultural sector and for our economy.

The next point I will refer to is the Government's commitment to easing the burden of inflation. One of the areas in which we need to take action in this respect is to take whatever action we can to relieve some of the burden of uncontrolled public expenditure on our taxation system, on our ability to use the funds we have at our disposal, and to relieve, where we can, a part of the burden of this on the ordinary taxpayer, whatever kind of taxes he is paying, PAYE, VAT or excise duty. We are all in it together. It is essential for the further development of economic activity that we succeed in that kind of action.

One of the main influences in keeping people out of jobs, and in depressing the level of activity on farms and other productive enterprises, is the high rate of inflation which we have seen over a period of years. Unless we can get that under control we can do very little to improve our prospects of employing our own people and being able to compete abroad in markets where we must sell and on our own home market with products imported from abroad. That is a central feature of this Government's programme and we will continue with it energetically because it responds to the needs of all the productive sectors of our economy.

There was some discussion recently on the decision we made some weeks ago on the exchange rate of our currency in the EMS system. It was said in a number of quarters that we should have decided at that point to devalue the central rate of our púnt, and that consequently we should have devalued the green rate of our punt and that, as a result of that course of action, we would have had a possibility of increasing farm prices and of moving to some extent in the direction of alleviating our serious farm income problems. I do not dispute, nor would the Government as a whole dispute, the fact that, were we in a position to devalue our green rate, certain benefits would necessarily follow in the agricultural sector. The essential point is that that is only a partial view of the situation. An overall devaluation of our currency would bring with it a number of inflationary pressures with which, at this point, we feel it would not be appropriate to burden the economy and which would have their effects on the agricultural sector.

At this time of the year in many important sectors of agriculture we are at a low point so far as production is concerned. In a number of sectors—and the milk sector is only one—we would have to wait for some time before the benefits in terms of price increases and increases in guarantees became real to any significant extent. Equally we are at a time when farming is sensitive to cost increases. We are coming to—and in some parts of the country we are at—the cultivation season and for certain crops we are at the very beginning of the cultivation season. We are at a point in the year where inputs are going into farming and where expenditure is being incurred on inputs for next year's production season.

To the extent that those inputs are sensitive to cost increases arising abroad, whether through price increases abroad or as a result of a devaluation on our part, we would pay the penalty immediately. While the beneficial effects of such a move on agriculture would not come immediately, some of the ill-effects of such a move on agriculture would probably come sooner. For that reason, and having regard to the wider and more general inflationary results which would have followed at that point from a devaluation, the Government took the decision that we would maintain our central rate.

It has also been said in a number of quarters that, even in the context of maintaining the central rate of our currency, as we did on that occasion, nevertheless we should have devalued our green exchange rate. That does not seem to me—and I am quite sure it would not seem to our Community partners—to be in any way an appropriate response to the situation. Over a period of years successive Governments here have followed a policy of bringing the green exchange rate of our currency into line with the market rate. Normally that meant we were bringing down our green exchange rate because the market exchange rate of our currency was going down and we were making sure that the green rate caught up in a sense with the downward slope of the market rate.

At a time when our market rate has been maintained more or less, at the pre-adjustment level, to say that we should devalue our green rate and deliberately bring it further away from the market exchange rate is not the kind of policy which would commend itself to our partners in the Community. It would be exactly the reverse of the kind of policy which successive Governments here have been promoting over the past eight years since we joined the European Community. That is one aspect of the situation where, in the context of this debate, a further exposition of the Government's views was appropriate.

We are not entirely alone in the measures we want to take in the agricultural sector. A number of measures are open to us in the context of our membership of the European Community. When we are constructing our approach to the fixing of European prices for the coming year my concern will be to include among those measures any measure which is appropriate for inclusion in that kind of package and which holds out a promise of making a substantial dent in the kind of farm income problem we are dealing with now. We have included some of these measures in our programme. I have no doubt that other measures will be included, and that other measures will be found to be useful in the context of that kind of discussion.

I want to make it quite clear that, not only in the context of price fixing but in the more general context of the discussion now going on, culminating in the European Council meeting towards the end of November, my concern and the Government's concern will be to make it quite clear that we expect the European Community to continue to live up to the obligations they undertook and the obligations we saw very clearly as being there when we joined the Community.

Finally I want to make the point—coming back in a sense to where I started—-that the kind of measures open to us in the agricultural sector and in other sectors of the economy may be wide, but proper management requires that we make the right choices as between different measures. I want to repeat the point I made at the beginning that the previous Government showed themselves unable to make these choices and for that reason we are now obliged to include in our calculations measures which will allow us to wipe out or even to keep up with the burden of debt with which they saddled us for non-productive purposes.

Within the constraints imposed by that situation we will take all the measures open to us in order to respond to the economic problems we face at the moment and to deal with what I repeat is a very serious income crisis in the farming sector, one which has extremely grave implications not only for our farming population but also for people in country towns and for all the people working in industries which depend directly or indirectly on agriculture. We are determined to take all measures open to us to get over that problem. We will proceed with the measures in our programme and other measures which may be put forward to us or which we may develop ourselves as being legitimate responses to that problem.

Mr. Power

The previous speaker indicated that they had a distinct advantage over our Government in the last Dáil. He said his Government were able to make decision which we are unable to make. However, we were united in the decisions we made, viewing the problem from every angle. We felt the decisions we took were the correct ones, and they will prove to be.

There were two big questions facing the people before the last election. Leaving aside idealism and nationalism, these were employment and inflation. Those matters engaged the attention of the people. They engaged the attention of one of the partners in the Coalition to the extent that they had a slogan: "We want jobs, not promises". That poster is still hanging on poles in my parish. I think I shall take it down and put it among my souvenirs. I challenge anyone to point out anything the Government have done since their term in office that has improved the situation with regard to jobs and inflation. If anyone has anything to offer in that regard, now is the time to do so. I cannot find anything they have done to reduce inflation or create jobs.

The Minister renewed his commitment to reduce the burden of taxation. Nothing has been done to reduce the overall burden of taxation. Moves have been made which increased inflation to the highest level we have experienced for many years. I am aware of people who took a decision to provide themselves with a house and not ask their local council to do it. Their mortgages were 13.15 per cent last March. Now they find they have a mortgage of 16.25 per cent. These people were prepared to make a sacrifice and find £50 a week to house themselves. They may not be developing farmers but people trying to set up a home. They need help. When the Government are prepared to help people who have incurred big debts to increase their standard of living, they have a duty to help those on the lowest rung of the ladder.

People do not appreciate the significance of the increase in VAT, which will prove a heavy burden. I heard the previous speaker say that conscious decisions of the Government added 5 per cent to annual inflation. I believe that is correct. I would remind the Minister for Agriculture that before the election we met representatives of the IFA. At that stage Deputy MacSharry was bringing home considerable benefits every week in what we called the Brussels package. I got the impression that they were inclined to dismiss these and that their main concern was for the future of farming and the problem of how to counteract the galloping inflation we appeared to have no answer for. I was asked to what level did I feel this inflation could be reduced, inflation that affects inputs and inbuilt costs which effectively would make our products less competitive abroad. I felt that, because we import about 6 per cent of our inflation and have no control over it, with good management we might be in a position in three years of sensible, steady Government to reduce the annual rate of inflation to 12 per cent. That did not appeal to the farmers I met from Kildare on that occasion and they seemed to be unhappy with anything Fianna Fáil had to offer. I do not know what they were told by the parties in Opposition at that time. Since they were so ready to make promises in other directions, I am sure the farmers received some too. What possibility is there that in two and a half years' time the inflation rate will be brought down to anything like 12 per cent.

When we look at the problems of inflation and employment we can see the differences in approach between this Government and the previous one in the attitudes displayed in the television appearance some nights before the election of Deputies FitzGerald and Haughey. I have no doubt who won the debate. Everyone is in doubt about who won the election. Certainly the people did not win it. Deputy Haughey displayed a certain human sympathy in his approach. I felt that the man who was so glib with his figures, book-keeping and economics would have a business like economic approach to his problem. That was to be seen in the budget brought in shortly after the new Government took office. It was a public relations budget. It was strictly a book-keeping exercise. I did not see any consideration given to human relationships. They took second place. The middle way pointed out by our Government is possibly the best way to operate. If it is necessary in a recessionary period to borrow to provide jobs and plan for the future, one has a duty to borrow. Those who tell me that because we are borrowing today we are placing an impossible burden on future generations might do well to remember that the present generation of young Irelanders deserve a chance and those leaving school deserve a chance. If needs be, should we not borrow to try to help them find jobs?

On the day the budget was introduced we were treated to an instant appraisal of our finances by the Taoiseach. He told us he had a quick look at the books and was amazed at the situation we were in. If one read that in a novel one would say it was a poorly constructed plot. It lacks credence. Nobody believed it. It is an indication of a poorly designed plot to prove to the people that any strict measures which the Government had to take were because of the condition in which the previous Government left the country. Our party was to be blamed for leaving a huge debt behind it. People ask me, and it is an indication that the seeds that were sown germinated to a certain extent in their minds, if Fianna Fáil were in today would things be any better? I can say that they would be better. Conscious but petty decisions have been taken by the Government. While certain moneys have been recouped certain other moneys were thrown away. I am confident that the only reason for the reintroduction of car tax on vehicles of less than 16 horse power was that Fianna Fáil had abolished tax on such vehicles. I am confident, too, that the increases in petrol prices would not have been sanctioned at that time by a Fianna Fáil Government. These impositions have hit hardest those motorists who are lucky enough to have jobs and who are prepared to drive up to 30 and 40 miles to work and home again each day, whether they be employed in the building trade in Dublin or elsewhere. They are very many such people in the counties surrounding Dublin. No Government have yet designed an income tax code that would give relief to those people for the money spent travelling to and from work whereas others in more lofty professions—people who do not have to wear smocks and who do not have calloused hands—are in a position to write off such expenses against their tax free allowances, thereby saving themselves a considerable amount of money.

Some of the measures taken in the July budget would indicate that there is a vendetta of some kind against the motor industry though I expect that some Members on the Government side are involved in that industry. We must now have what is the dearest motoring in Europe. I would not be too concerned about the increases in drink and cigarette prices because while these may be tough for the public there is a choice in that regard whereas very few motorists have any such choice. There is very little motoring for pleasure. That is an activity that is fast disappearing. If the Government consider it necessary to abolish the various subsidies and to reintroduce car tax in order to bring in a few million pounds and if it was necessary to put more tax on petrol, why do they have to throw away £400 million merely to let it be seen that they are keeping a rash promise made to the electorate?

The Government tell us that they made conscious decisions as to what should be done but in regard to one item at least they do not have the backing of all their people. I refer to the promise to pay £9.60 per week to the stay at home wife. As I said before the election, most people on hearing that proposal, assumed that the money would be paid to all stay at home wives. I hope that the Government manage to stay together long enough to enable them to bring in the next budget when people will realise that if 300,000 women will receive this payment, there will be about three times as many who will not get it. I regard the proposal to take £9.60 per week from a husband's wages and to post it to his wife as an insult to family relationships. Most married couples work together to make their marriages a success. They share their resources but they share also the difficulties. If there is the odd case of a husband who will not give his wife a fair amount of housekeeping money it is unlikely that the Government's measure will remedy such situations because the husband would be likely to stop a similar amount from the housekeeping money as that paid by the Government to his wife.

Apart from throwing money away in the ways I have described, there is the question of reducing the basic income tax rate from 35p to 25p. That is a proposal which does not appear to have received a unanimous welcome among the Cabinet having regard to the fact that the Tánaiste was not aware of its being made public and on coming home from one of his many trips abroad thought the matter was still open for discussion. My advice to the Government is that if they have £400 million to throw away there are better ways of spending it than they suggest. They should give a little to those whom they have persecuted.

On the question of employment, I am aware that apart from the lack of commitment on the part of the Government to reducing unemployment there is a cutback in jobs. I am familiar with a simple case involving a job that was done on the Curragh by four employees of the Department of Defence. One of those people died early this year and has not been replaced with the result that three people are now doing the work of four and when one of these is on holidays, two are doing the work of four. Despite the fact that a recommendation for a replacement has been sent to the Minister and that the interview board have decided on a suitable replacement, the fourth employee has not been replaced.

I am disturbed by the murmurings I hear through the grapevine regarding the forestry Department. In this Department, more than any other, it is necessary to have long-term planning. The Department must continue to built up a land bank and to plan ahead. Even if they wish to increase the acreage under planting there must be planning. We cannot afford to have valley periods but if we have them we will feel the resulting pinch in about 20 years time. As Minister in charge of that Department I had a mandate from the Government to buy all the land possible. The money was there for that purpose.

Resulting from a recent development whereby an industry from Oregon intended basing itself here for the purpose of utilising the timber thinnings that would become available during the next ten years and beyond—these were thinnings for which we did not have a market a year ago—we had a commitment to that firm regarding suitable roads in forests and the availability of the more sophisticated harvesters to allow us to extract 300,000 tonnes of thinnings each year. I suspect strongly that there has been a big cutback in that regard. The American firm concerned asked me if I could give them an assurance that the planned continuity of our forestry programme would not be interfered with. Having looked back on the records I assured them that at no time did any Government, even the two previous Coalitions, effect any dilution in the amount of money and effort being put into our forestry programme. However, I fear that the present cutbacks will undo all the good that has been done up to now. Our history in afforestation must be considered a success story. If an exile who had returned home after spending, say, 40 years away, were to ask me for an indication of how we have used our freedom, I would show him the State forests.

However, if the Cabinet have decided that no money is to be found or that there would be a cutback and that there is a possibility that 500 forestry workers would be laid off before the winter, that is a grave mistake.

Debate adjourned.