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

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

Mr. Lyons

When I was interrupted by Question Time last week I was giving my views and those of my constituents on why I condemn the supplementary budget introduced by this Government last July. The Deputies from all parties, big and small, who support the Government must know the feelings of their constituents which I am sure they hear each weekend when they return. That supplementary budget could be summed up as demoralising for the whole community. Its effect will be to increase the rate of inflation. Industry and agriculture are suffering very heavily. I might mention that a special convention is to be held tonight by the IFA in the Cork Opera House in order to highlight the situation in agriculture and I have no doubt that much will be said about the budget.

The Government are having great difficulty in putting together their tax package and major decisions on the mode of operation are still outstanding. Tax officers are demoralised. I wonder how the 300,000 cheques for the infamous £9.60 will be sent out. This ploy fooled many people into voting for Fine Gael but attempts are now being made to whittle down this promise and some people are saying it is a mistake. Will it ever be introduced and, if so, will the amount be increased in line with inflation? The promise was made last May and it is claimed that the payment will be introduced in April. Will back money be payable or will the value be updated? Civil servants say that extra staffing will be needed to deal with this mammoth task, yet it is the policy of the Government to freeze intake to the public service.

This supplementary budget was introduced not because, as was alleged, the cupboard was bare but to provide funds for the implementation of election pledges which were no more than a cheap gimmick to win votes and which are distorting the whole thrust of economic policy. If the Government carry out these measures we will be faced with Estimates next year which will include substantial reductions. The IMF, the director of the ESRI and the leader of the Labour Party have all pressed the Government to postpone their tax reforms but, while the Government are very often happy to quote such authorities when it suits them, they will ignore their advice when they choose.

The Government have abandoned the fight against unemployment. I referred earlier to the situation in the motor industry and the construction industry is also in deep trouble. The blame for this lies totally on the shoulders of the Government. Not since the middle fifties have so many tradesmen been unemployed. Surely Members who support this Finance Bill must be aware of this through their dealings with constituents. The 50 per cent increase in VAT was a major factor in discouraging the development of the construction and allied industries. Another factor was the interference by the Minister for the Environment with housing loans, grants and subsidies.

While Fianna Fáil were in Government they endeavoured to hold down unemployment figures and up to June this year the number out of work was rising less rapidly than in most EEC countries, although we were not satisfied that there should be any increase. There was a rise of 27 per cent here, compared with 60 per cent in Britain and the Netherlands and 44 per cent in Germany. The unemployment figures showed signs of stabilising in May and June but we have seen a progressive rise since then as a result of this Government's deflationary policies. They have frozen job creation in the public service and placed the whole burden of job creation on the private sector. The Taoiseach said for the first time last weekend that the creation and preservation of jobs is the first priority. Why then has he imposed a freeze on the creation of posts in the public sector? Who will look after the weekly payments of £9.60? Why has he reduced the number of teaching posts in primary schools and the intake to teacher-training colleges?

The speaker who preceded me issued a challenge which had something to do with our plan for economic development. I issue a challenge to him, the entire Government and all the parties, small and large, who are publicly supporting the keeping in power of this Government. The challenge is: go to Cavan-Monaghan and prove your worth if you think your policies are right and this Government have the right to stay in power.

Mrs. Fennell

In this, my first speech to the House, I am conscious that this debate is about getting our political priorities right. It is a start to ensuring responsible control of the nation's financial affairs. There are many who would like to continue being spared the harsh reality of our foreign debts, our empty cupboard, who would prefer to distance themselves from the operations and affairs of the Exchequer. I believe that the fact that this Government initiated tough economic measures, almost before they had warmed the seats of this House, brought home to a majority of people the seriousness to them, their children, their communities of a country close to bankruptcy.

In the intervening time since last July, there has been a growing realisation of the reasons which motivated the Minister for Finance to introduce this supplementary budget. Mainly these reasons are to do with the fact that the last Government conducted the financial affairs of this nation like drunken spendthrifts.

In January last the Exchequer borrowing requirement was decided at £1,296 million of which £515 million was to finance the current budget deficit for the year. Only six months later — by the end of June almost all of this £515 million was borrowed — the actual figure was £457 million. Quite literally, the economy was so sick that it was haemorrhaging massively, and if not checked, the patient, in this case the Irish economy, would have bled to death.

May I suggest, with apologies to the housewives and mothers of Ireland, that if they handled their household affairs like the last Government, their children would be going around in tatters, hungry and miserable, and they would be "in hock" to the moneylenders? Unlike the previous administration, they would not be cavalier about it and dismiss their mismanagement with ear to ear cheer, as Fianna Fáil did.

It does not help for us to know the reasons for the overspending, and the fudged figures. For 18 months there was an election in the offing, and the old Fianna Fáil tactic of trying to buy people with their own money was to be tried yet again, except this time, they spread the bounty around before the election, instead of putting it in their manifesto. Voters, they rightly suspected, would not fall for the same trick twice from them. So, in the dying days of the last Government, all kinds of marvellous schemes were thought up, to be paid for with borrowed money, and despite the prudent advice of Deputy McCreevy, these schemes were foisted on an unconvinced public: "A new house? Here is £4,000 to ease the pain. A new sports centre? Go ahead, sign the contract, never mind the details". Fifty-five such schemes were approved by letter, although no funds existed to cover them. Irish people are human: if a promise seems attractive they are tempted to accept it. If a Government give the impression that we can live on the never-never, who is to blame the people if they also overspend?

And yet, despite all the spurious optimism and reckless spending, the people were not fooled. They realised that you cannot run a home, a business or a country indefinitely on the Kathleen Mavourneen system. They saw through Fianna Fáil's cloud cuckoo land of economic unreality, and opted for a Government which would have the courage to spend within our means, the means of the people, and to plan for the future.

Of course it is easier to borrow your way into trouble than it is to live within your means. But we all know that living within your means, and planning ahead, leads to a far greater sense of security. June 11 last could be regarded as the day the bubble burst for Fianna Fáil. That day showed that people are prepared to accept that small sacrifices are needed to secure our futures.

This supplementary budget marks the first essential step in this Government's phased economic programme. For my part, and I believe I reflect the thinking of a majority of people, I know that if Deputy Haughey's party now occupied these Government benches they would have had to introduce similar or tougher measures if they were not to continue to go abroad with the begging bowl. Is anyone outside their own party flock fooled by their protestations of innocence now?

Despite the perilous state of the economy when we took office, we gave an undertaking that there would be no further increases in 1981 in the price of specified key foodstuffs, namely, bread, flour, milk, butter and margarine. This provision is in recognition of the difficulty such price increases would cause to the weaker sections of our community. Furthermore, the Minister for Finance has announced the initiation of three schemes to deal with particular problems of the elderly and the young. These are the Community Care Task Force, aimed at improving the living conditions of the old, the Youth Employment Services Scheme, which will meet particular needs of the community, and the Youth Employment Enterprise Scheme, the purpose of which is to provide information and funding for young people with viable business proposals.

It is my experience that many people have expressed agreement with the July budget provisions and with the philosophy enunciated by the Minister for Finance. An even more significant feature of public reaction was the suggestion from many that our measures under this Bill did not go far enough. I feel this indicates a sharper understanding of the reality of national economics among the general public than they are generally credited with.

Let us make no mistake, it was neither an accident nor a stroke of fate that the electorate, given the choice of another term under the leadership of Deputy Haughey or a new start with Deputy Garret FitzGerald, voted as they did last June.

In addressing myself to Irishwomen I should like to record that over the years this House has seen a tiny number of Deputies who have taken a sincere interest in the needs and problems of Irishwomen. For the most part the rights of 51 per cent of the electorate have been virtually ignored. To an extent, women themselves are to blame for this. But then they accepted low expectations and played a passive political role in society, because our system moulded them to submit to a mystical and unreal image of what women should be rather than what women could be. There have been enlightened politicians in the past, but so far no one like the Taoiseach, Deputy FitzGerald, who did not merely talk about making politics and elections relevant for women: he actually encouraged their participation, and for the first time ever women's needs were given serious priority in an election manifesto in this country. It was a new beginning for us, because the sad reality is that since the birth of this State 60 years ago, successive Dáils stand indicted for their negligence and disregard for the needs of our female citizens.

Having said that, I do not intend in the future to spend my time here carping and complaining about the mistakes — and there have been many — of the past. My objective is to attempt, in a constructive way, to motivate Deputies by raising issues of fundamental importance to the daily lives and future of women and children and seeking their support for necessary changes.

Women as a group have a vested interest in seeing that our society is wisely managed. Our nation has the highest family dependency rate, the highest birthrate in the EEC, and, matched to this, we have a neglected record of development and planning in essential areas related to the needs of families. Just examine our fragmented community health programme. We do not have a comprehensive public health nursing service, we do not have a comprehensive family planning service, and our preventative and educational medical schemes leave much to be desired. One example I should like to give is of the important breast cancer screening technique of mammography which is available in other countries but is virtually unavailable for women here, even for diagnostic reasons.

This is in a country where the death rate from the disease is around 500 women per year. Furthermore, we do not have a structure of playschools to cater for what must be the largest population of small children in Europe. We cannot finance a meaningful retraining programme for women in mid-life. Above all, we need maternity hospitals where women, all women and not just the privileged few, can give birth with dignity. The list is endless, but all need money. Available funding is essential, and this in the long term can only be provided by proper economic planning and a sense of vision. I am glad a start has been made.

Now I should like to turn specially to the proposed stay-at-home-allowance which will be effective in the coming year. Some of the views expressed in this debate on that provision I have found to be utterly depressing. I respect everyone's right to hold and put forward their views, but opinions based on prejudice or ignorance should be seen clearly for what they are. And, likewise, the people who make them. To those Deputies I say: "Hands off the women's allowance; you do not speak for Irishwomen. Wives and mothers of this State came out with their prams and their toddlers on a wet day and put their approval on our proposed allowance on record. Do not treat them as nitwits, whose democratic choice is of so little value that it can be overruled in this House". This allowance is the first step to recognising the role and contribution of women in the home and as such is a response to years of campaigning by individual women and representative groups of women. Most Deputies can never realise what this modest sum will mean to many women. Whether we like it or not, society's measure of one's worth has always been in terms of financial recognition for work done. This allowance establishes the principle that women have rights to financial reward, the same as anyone else. I can assure those who may question the validity of this concept that there are mothers in this city—yes, even in the desirable suburbs—who would not on any day of the week have the price of a bus ride to town. This state of poverty is called financial dependence and represents the lowest form of humiliation to many wives. But I must emphasise that the welcome for this allowance goes far beyond the type of wife I have just quoted. Women out there are saying to us: "it is about time you got the message, now get on with the job".

To deal with the spurious argument that in implementing this proposal the State is interfering in the affairs of the family, I suggest that we put this into its proper context long ago. We heard the same pathetic defence back in 1973 when we had the debate on vesting rights to the children's allowance in the mother rather than the father. We also had it to a lesser degree when the Government were introducing measures—not that long ago—to protect women who were being battered in their own homes. It is worth noting, as many women have, the level of consciousness of contemporary Irish-women's role we found among the ranks of Fianna Fáil last June. Where else in the world, I question, would one find a political party taking large expensive advertisements in all newspapers to proclaim their sexual bias to the electorate? They said to women: "Your husband is the boss, he does the most important job of earning the income, you can lay no claim to that money". I will refresh memories of those advertisements for those who have forgotten: "Men, Fine Gael are making advances to your wife, and they are doing it with your money". Yes, Fine Gael have designs on Irish wives, but they address their remarks directly to the wives because we see a wife as a person in her own right. It is a sad fact that, if those advertisements are a true reflection of the thinking of the largest party in the land, then Irishwomen still have a steep uphill battle to win.

For most women the £9.60 per week, plus the increased weekly children's allowance of £3, represents the first step in an enlightened programme for women. It is a sound platform to be built on. For my part I will work to ensure that women are not disappointed, for I know they are watching this administration with hope and expectation. To be part of a Government who have a sincere commitment to social and legal reform is a joy to me; and to know that we have a determined policy to plan, and are prepared to take necessary though unpopular measures to ensure a prosperous future for all, men and women, is indeed a challenging experience for me, a new female Deputy.

Mr. Flynn

We have developing now an extraordinary political scene indeed. I am sure that to the political commentators it is a real joy to have the Coalition in power. They are providing endless type for those commentators in foretelling what might or might not happen from day to day; and, those who suggested this was going to be a lively session are accurate. It is a bizarre scene when one considers the situation. We have this extraordinary galaxy of rising and falling stars here daily and I wonder if the Government have taken note that they are in Government because some of them speak as if they were still in Opposition. We have the extraordinary situation of backbenchers, frontbenchers and hopeful frontbenchers criticising each other as to what should or should not be done by the Government. If the Government claim they were elected to govern the country they should recognise that they are in office and get on with the business. As far as we are concerned, the present situation would lead me to jocund merriment but for the fact that it has serious consequences for Ireland at home and abroad.

There has been enormous damage done since the Coalition took office by the extraordinary preoccupation of the Government in bashing themselves. They are leaving no room for the Opposition to get in on the act. They should recognise that they are in Government, carry out their duty and leave us to adopt the role that has been given to us by the electorate to deal with them. Of course, because of the internal wrangling in Fine Gael between the Ministers and the backbenchers and between Fine Gael and the Labour Party, the decent thing to do would be to go to the country and have the matter sorted out once and for all. They should have the test that would decide the matter for a decent period of Government. I cannot remember who made the comment but it certainly is true that we come in here and pray for guidance, but at the very moment of the prayer we have no confidence in the good Lord that we are praying to and we are thinking up our own answers to the prayers that we are offering up every morning. Perhaps we could do without that little bit of hypocrisy as well.

The effect of the budget that this Finance Bill applies to is to reduce growth here and all the political commentators, both national and international, recognise this. It has increased unemployment and inflation. There has been a drop in the living standards of ordinary people. I would suggest to the Government that they have no mandate from the people for the inflationary policies that they have adopted since going into office.

I recognise that Deputy Nuala Fennell was making her maiden speech and it is not political etiquette to interrupt but I found it hard to resist the temptation. Let us be honest in admitting that Deputy Fennell's party have done more to bring about a situation where there are children going around this town in tatters than any other party since the foundation of this State. During any of the periods when Fianna Fáil were in Government nobody suggested that such a situation would be reached or had been reached. So it is not quite honest of Deputy Fennell to come in here and talk of children going around in tatters. They would not be but for the inflationary policies that have been put through this House by the Coalition Government.

We have the great arrogance of the authoritarian-style Government creeping into this country again. This arrogance is creeping on the Government Ministers day by day. We saw some displays of it last week. If we are to believe some of the snippets that make their way into the gossip columns in political life here, then some of the Ministers have become so arrogant that they must be referred to as Minister. But so be it. That kind of arrogance always finds its way into Coalition operations and did in the past.

Minister of State at the Department of Trade Commerce and Tourism (Mr. Begley)

The cupboard was fairly bare.

Mr. Flynn

I will come to that in a moment. We have a continuation of this non-caring attitude to family hardship. Deputy Fennell and the other Fine Gael Deputies should note that this unemployment misery has been created by them. Fianna Fáil have always recognised that unemployment was at too high a level but were determined to keep a rein on it and stop it going out of control. But the policies being implemented by this Government leave no hope of that whatsoever and the misery being felt throughout the country because of unemployment can only be gauged when one leaves some of the plusher suburban city areas.

We have heard no speeches from any Government Ministers about relieving the situation. They have decided to stop talking about it, to raise smokescreens with other matters. The only reason that is being done is to divert the people's attention from the hardship they are creating. I wish some Government Ministers would make at least the occasional speech and express an interest in unemployment, inflation and rising prices. If we even got some suggestion that they had something in mind to deal with the matter instead of talking about issues that may be important there would be some hope. These other matters should take their proper place in the order of priorities.

What the Fine Gael Deputies are preaching and are being told to preach is a policy and an attitude which is not perhaps held by their own Leader. I refer to the Taoiseach's comments at a recent bi-annual dinner of the Stock Exchange. I am quite sure that the Taoiseach did not have a big audience of unemployed people there. Perhaps it was hoped that some of his comments at that function might not get the same kind of political press coverage as they would if he were making a speech here in the House. But the matters that he referred to at that function are well worth bearing in mind. They showed, beyond yea or nay, that the Taoiseach himself has double vision and double thinking on some matters of economic importance to this country. One of the suggestions he made at that function was that the risk of major financial crisis has been effectively eliminated now that the Government commitment to sustainable and convergent strategy for public finances was well understood and recognised. That is a fine mouthful for any politician to get across to the ordinary voters here. But it is important to understand the significance of it. The Taoiseach says that the crisis has been effectively eliminated. By Jove, what this Government have done has been very severe, and if we are now to believe that the crisis has passed and that the blow struck last July was enough to deal effectively with the matter, how can that attitude be accommodated to Government Ministers trotting around the country saying that terrible harshness is needed to deal with the continuing crisis. Their own Leader says it is past. The only thing that I can say about the sustainable and convergent strategy is that there certainly has been a sustained attack on the finances of the ordinary people and certainly we are converging on disaster. It is suggested that the crisis in public finances is well understood and recognised by everybody. Most certainly it is understood by the gurus of Fine Gael and those who have been commissioned by Fine Gael to pay due attention to their election manifesto for the next time out, which is not too far distant. It is well recognised by everybody that ultra right-wing conservativism has crept into the policies, economic, social and otherwise of this country. That is what is recognised and understood by the people. I wish the Government would make up their minds. If the crisis is over then let us get a different shape in the policies that are being enunciated daily by the Government Ministers. The Taoiseach continued at that function to go into some depth about the situation. He also suggested that in 1981 the current deficit would not deviate at all significantly from that projected last July. If that is the case then what is all the wild talk about the bankers of the world knocking at our doors? It is under control. It was nipped in the bud by Garret and the boys. It was nipped in the bud by the Taoiseach and his friends in one stroke last July and now the situation is under total control.

I wish they would be consistent and preach that kind of thing to the general public rather than having poor innocent people coming in here with Government briefs and saying: "Things are difficult. We will have to take harsh measures and get a lot of money together to introduce an early goody-goody budget. Then we will go to the country and get rid of the millstone around our necks called the Labour Party."

I must refer to another suggestion made at that famous function. The Taoiseach said that their commitment to cutting the budget deficit was not empty rhetoric unmatched by performance when the numbers are counted. The bingo session has started in Irish politics, and the numbers coming out now are entirely different from what they were in July. The numbers coming out of the bingo machine and trotted out here every day are matching up and all is well for the stockbrokers but not for the ordinary people of Ireland.

He went on to ask where to dismantle, where to restructure and where to collect more revenue. Certainly they are dismantling. They know where and how to dismantle, and they are going about it systematically. Their dismantling is to be found in every corner under the control of the Government. They are dismantling our health services. I will deal with that at length before I finish. They are dismantling our educational institutions and services. They are good at that. They are dismantling the local authorities and the health boards. They are good at the dismantling process.

They are also good at restructuring and collection of more revenue. They have gone about collecting more revenue in no uncertain terms, not because it is necessary for social and economic reasons, but for political reasons to get in as much money as possible. The Minister for Finance stated unequivocally that it was the quickest way to get the cash. The Taoiseach said there is no crisis, that the crisis has moved away. Why then do they need these enormous amounts of cash, unless it is to finance a programme next year which they hope will lead them into the promised land of running Ireland on their own? Of course, they are leading us into the no man's land of ruining Ireland, not running it.

In that very important speech to those very important people who have their finger on the pulse of international monetary funds, it was suggested that the slippery slope is now irrelevant because of the Government's commitment to reform. That was a fine statement from the Taoiseach who has his Ministers trotting around Ireland preaching doom and gloom to all and sundry. I will deal at some length with some of that so-called restructuring and reform, and we will see the depths to which this misguided Government are prepared to go to further their own base political aims.

Deputy Fennell suggested that the Fianna Fáil tactic was to buy votes earlier this year by putting a programme of goodies in front of the people. We offered things which we felt were necessary. I do not know what to call the commitment to reform her Government have in mind, but it left us standing so far as promises of goodies were concerned. Deputy Fennell did not quite appreciate the impact of two sentences she uttered in the House this morning following on her remarks about tactics. She said that during the election Fianna Fáil offered a grant of £4,000 for a new house and also promised sports centres.

I know she is a caring and concerned person about the needs of the ordinary people in the community. It was less than honest of her to suggest she was against those provisions. I would regret it greatly if I thought people like Deputy Fennell were now suggesting it was not right and proper to help young people to build their own homes by giving them a decent grant or mortgage subsidy. I would regret it even more if I thought Deputy Fennell really believed sports facilities were not an essential requirement.

Mrs. Fennell

They are essential if they are planned.

Mr. Flynn

I appreciate that she is under instructions to move in a certain direction and finds it difficult to accommodate herself to some of the policies now being promoted by some of her front bench colleagues.

I want to get back to political reform as against taxation or economic reform. We had a fine example of political reform on the day this Dáil met for the first time. It is important to remember it because it is a significant aspect of Coalition government. I refer to the Taoiseach's attitude in the appointment of his Government. To say he handled it most maladroitly would be to put it very loosely indeed. In his appointment of his Government, he not only humiliated some long-standing upright members of his party but he also alienated them from his own party, and that is more important. There is now a gang who would be as happy as Larry to be rid of the good Deputy Dr. FitzGerald as Taoiseach. The significance of this is now beginning to show. The strategy of those alienated and humiliated souls is growing and festering.

All and sundry are beginning to see that there is no cohesion in the Government and no loyalty to the Taoiseach. They want to get rid of him. This happened so quickly that people cannot credit it. Leading members of the Fine Gael Party are openly defying their party Leader even here in the House. That is nothing compared with what is being said in the corridors. I am not talking about the corridors of power but the corridors where adjustments of attitude are being made by people who were humiliated and alienated. This serious internal political crisis is pre-occupying the Coalition Government so much that all they can discuss, I understand, is how to deal with "your man" or will "your man" step out of line again and, if so, what will they do.

We have that coupled with the sham situation which is now the Labour Party. The people know well, by tradition and experience, that coalitions do not work but have taken the electoral decision on occasions to put Fianna Fáil out of Government. We were only out a month when all the people who were saying that it was time for a change are now saying that we should keep at them until we get them out. Many of those are Fine Gael people. They know that it will not work on this occasion either, even with the great Garrett. The Government are expending a lot of energy dealing with the Independent Members who keep them in the "brown leather seats" a previous speaker referred to. The question of dealing with Independents has a debilitating effect on any Government's performance. I would like to know from some Minister what political procedures are now adopted and is permission to proceed with a particular piece of legislation achieved before or after the policy is formulated?

People would like to know those things because they have a great bearing on the legislative programme we are getting. The credibility of the Government is in shreds. They have to humour the Independents and meet them privately. No important decision can be taken until the lines are cleared with those people. They are entitled to their opinion, but are they entitled to as much opinion as they are being given? The people want to know if they are being credited with more attention than they are electorally entitled to.

How does one deal with this? We see the Taoiseach and some of his Ministers arranging their schedule, no matter what is on or how important nationally or internationally it is, to humour the Independents before they can get the all-clear to deal with a legislative programme which the Taoiseach says is so important and which has been the cause of putting aside all other things, including the Cavan-Monaghan by-election. The result has been that we are getting some legislative goodies that would not normally have been given at this time when there are so many other pressing matters which we say need to be attended to but which the Taoiseach in one of his recent speeches said have now been dealt with. We are told that the crisis has been fixed since 23 July last.

The Independents are now playing a role which it was never intended they should play in a democracy and we are getting some legislation which they particularly want and have made arrangements with the Government about. Has it the full support of the people? My biggest disappointment last week was the performance of Deputy Noel Browne, for whom I always had a sneaking regard. I always regarded him as a purist in the socialist sense but I am afraid he deviated from that last week in a very telling way. Last spring he found it absolutely essential and important democratically to move the by-election writ for North Tipperary. He was entitled to that view. He felt the people should have their representative in here for a day, a week, a month or a year. However, he found it in his heart to change his tune last week and say that it was not now necessary, that it was the start of a Dáil session which we are told will go on for four years.

What makes a man like Deputy Noel Browne change his view so radically on such a fundamentally democratic issue? It is because he had made an arrangement for certain legislative matters to be dealt with. They were matters essential to his thinking over a long period. One of those would deal with capital punishment. I would not like to pre-empt what might happen in relation to this issue over the next few days, but the good Deputy might be disappointed that even his best laid plans to have this matter dealt with may be thwarted. He may find that among those he made the deal with there are some who would sabotage his effort to implement that arrangement. He might also find there are those in other parties who feel that the time is not ripe for this legislation.

Deputy Browne said last week that it is important that corporal punishment be removed. I must admit, as a person who worked in the area where corporal punishment was once the order of the day — in recent times the position has changed and corporal punishment is fading away — that there might be second thoughts about that as well. I wish that some of the people who are so obsessed by the idea of having corporal punishment banished from our society were just as forthright in regard to other forms of punishment which are handed out to our youth. There are more ways of beating a child than giving him a slap on the hand. Mental abuse is also punishment handed out to our young people. I mean by mental abuse total freedom in television and radio to broadcast programmes which are not suitable for young people. Perhaps a tightening of the laws in that area might be more important at this time than the question of corporal punishment. I have not finally made up my mind on that matter yet, because I have seen the results of corporal punishment. I have also seen good done by a little slap at the appropriate time at home and I have also seen the good done on occasions in schools by a slap in dealing with certain matters. It did not leave any mark subsequently on the child. Perhaps I will get the opportunity of going into that on another occasion.

Deputy Browne said last week there was also to be an arrangement about a new Family Planning Bill. It will be very interesting to see what happens in relation to that. I wonder what arrangements will be made to change the existing situation? Is it part of the deal being done to guarantee the support of some of the Independents that perhaps we are on a slippery slope to abortion and other kinds of legislation? People do not want these things and are afraid that deals will be done for political purposes to bring about such situations.

Mr. Begley

Come back to the Bill for a change.

Mr. Flynn

There were to be arrangements with other Independents on capital taxation and that probably touches the Minister's heart strings. It is suggested that the Government are about to attempt something like a new 60 per cent band on capital taxation. That would be a nice trick. If a deal is done on that the Government will not be around to see it put through the House. One Independent in a casual remark last week stated that inside of 12 months the banks would be nationalised. I do not know what the Government will nationalise. As far as I am concerned they are nationalised already.

Mr. Begley

Mother Ireland is still rearing them.

Mr. Flynn

The Government have a strangle-hold on the banks. They refuse to allow them to lend by way of bridging. The banks are not allowed to use their surplus to make money available in the money market to people who wish to borrow. The truth is that the banks are all but nationalised in name. Ask any bank manager and he will tell you that. Banks have surplus funds but they cannot get their hands on them because the Central Bank says "No". The Government are utilising all this money. Are we now to see the final act in the splitting of the banks' throat? The few hundred million pounds the Government would get if the banks were nationalised would be frittered away in one fell swoop. We would be the laughing stock of the world.

Are these parts of a deal done with the Independents because, if they are, why do we not have the new legislative programme we will have to endure over the next year or so? There was a change of tactic in this budget and we now have punitive indirect taxation which is supposed to deal mar dhea with the budget deficit. It has nothing to do with that because if it had we would not have had the speech the Taoiseach trotted out last week to the stockbrokers. The budget deficit was well known before the election. How else could the Taoiseach have spoken about what was necessary to reduce it over a four year period? When he was questioned by astute political commentators he said that was a question that should be left until they got a look at the books. However, both the Taoiseach and his Minister for Finance were telling all and sundry about the deficit and they quoted figures. They did not want to talk to political commentators about it before the election. What happened at the election? Fine Gael stated that nothing positive would be done about this matter until 1983 at the earliest. What made it so acute that this savage attack had to be made as soon as they got in the door? Was all revealed to them on the road to Leinster House? Did a light shine on them when they thought they had a chance of getting onto the brown leather seats over there?

In advance of the election they stated they had no knowledge of the deficit. We made no secret that the deficit was what it was. They said nothing positive would be done until 1983 but that in the meantime — it is now not as serious as it was last week — it would be reduced through buoyancy of revenue. That is a mouthful. Things have changed utterly. They stated to the electorate before and during the campaign that there would be no supplementary budget in 1981. Buoyancy of revenue would look after the deficit this year and next year until they got their tune set up in 1983. I bracket with "buoyancy" the simple term "sinking". That is what the Government are about to do now. They are determined to sink us all.

The excuse after the election, when the light shone on them coming up the steps of Leinster House, was that they were alarmed at the extent of the deficit despite the fact that they are on record as saying they knew all the figures. They castigated us here daily because of the figures. This new-found information was the justification for all the brain-bashing and income-bashing that has taken place since then. The Government knew well the extent of the deficit before and during the election. It was no more news to them than it was to us. It is a cruel deception of the people to try to keep up this propaganda that it was otherwise.

Why did the Taoiseach and Minister for Finance not say they would cripple the electorate with new taxation? Why did they not tell the farmers there would be nothing for them or, as the Minister for Agriculture so eloquently put it last week, "Tighten your belts, boys, that is the way it has to be"? Why did they not tell the workers they would not be compensated for price increases as a result of their harsh budget or that their standard of living would be lowered? They could not tell the electorate this because their campaign would be in ribbons. However, the election is over now and the Government think they can cod the people by this half-baked tax restructure and the other policy, which can only be referred to as a seduction of some unfortunate housewives. These are the women about whom Deputy Fennell is so concerned and whose needs, according to her, are being recognised now for the first time. I would remind the good Deputy that any worthwhile step ever taken to further women's rights was taken by Fianna Fáil. While I accept to a large extent what she says I am not confident that women's rights are best being served in the way in which they are being dealt with now. We had a full programme dealing with this whole area but to continue to hack this question about is to lessen the status of women and their femininity.

I do not suppose that we are paragons of economic virtue but we are snow-white in purity compared to the perpetrators of the Coalition's mismanagemment from which we have suffered in the past few months.

Mr. G. Mitchell

The Seven Dwarfs.

Mr. Flynn

What is being attempted by the Government is a cruel deception of the electorate. The Coalition will pay the true price for this deception as soon as they can summon up enough gumption to face the electorate.

Mr. E. Collins

That will be in about four years' time.

Mr. Flynn

Let us consider some of the changes that are being suggested in the taxation system as part of its restructuring. All that is involved is a switch from direct to indirect taxation. There is nothing new or extraordinary in that. The basic elements would be the reduction of the deficit by way of the imposition of further indirect taxation but further increases will have to be imposed in order to pay for that reduction and, in addition, there will have to be more indirect taxation to further the new and laughable price tag of £9.60 per week on the married bliss of Irish people. These three impositions, or millstones as they might be called, would provide the formula for social unrest and national despondency and would lead to a depressed, frustrated and impoverished population. That is generally recognised by all the pundits at this time.

On this whole question of the tax reform package we should like to hear which side of the Government will have their way. There are those on both sides of the divide in furthering this new package, a package which is being recognised as folly and as having no relevance in Irish terms to economic revival. Instead, it will do enormous damage to the economy as has been recognised both nationally and internationally by those who are supposed to know. The reason for this is that the changes would require massive increases in indirect taxation. Among those who have spoken against these proposed changes are the IMF, the ESRI, the Leader of the Labour Party, the disgruntled and, perhaps, disappointed Fine Gael members, the Revenue Commissioners, some of the Labour gurus as well as independent bodies and others, many of whom this Government have used in the past to promote their ideas for the necessity for taking certain steps but whose advice is not being taken this time. It is so easy to change one's ground and to find excuses for doing so but we must ask who will benefit from these tax changes. Obviously, the poor and the needy will not be among the beneficiaries because if the reforms are implemented there will be new pay demands, many of which will be justifiable, with subsequent price increases and the inevitable industrial and agricultural cost increases. This will bring us back to the same old system of generating that spiral that will put the roller-coaster economic policies to shame next year.

I can appreciate readily the ideological argument taking place between the various elements of the Coalition in endeavouring to put the tax reform package into something presentable, to give it a Christmas dressing, so to speak, in order that it might be sold to the pundits. It is important to emphasise the proposed cuts in income tax. The Government are on record as saying that these cuts will be paid for by way of higher prices. As one of them said — I think it was the Minister for Finance — anything that is given to taxpayers will be paid for by taxpayers. That is some truism. There must be an enormous chasm between the various elements of the Government — the ultra-conservative Fine Gael Party, the pseudo-socialists of Labour and the others — struggling to find a label at this time. The budgetary strategy is very difficult to achieve in this kind of situation, with such ideological argument going on at that high level. Naturally, everybody welcomes a tax cut but the problem is the financing of any such cut and in this context we must ask if at this time of recession we can afford tax cuts. That is the burning question and the one that is causing the greatest problem for the Government.

There is no doubt but that the policies of this Government as enunciated by them in the election campaign are irreconcilable. Fine Gael said they wanted tax reform but that in order to achieve this there would be a 3½ per cent increase in indirect taxation. The Labour manifesto, though that has been totally shelved since, proposed cutting prices by 4 per cent. That was one of the goodies trotted out. We will cut prices by 4 per cent. By Jove, that promise has not been honoured, has it? The prices for the housewife will be cut. They have not been cut. Regarding the 3.5 per cent increase in indirect taxation which the Fine Gael manifesto said was necessary to accommodate their tax reform, why does Brendan Halligan say, "No, no, it is going to cost a lot more than that"? He says that inflation will go up at least 8 per cent next year. If it goes up 8 per cent next year we are going to pass the 30 per cent mark. I suppose that the Government will not be there long enough to see it and that will be a good job for everybody. These figures are being trotted out now by some of those who say they would be in support of the Coalition Government at this time. Of course, there are those who are not in favour of a Coalition because they see in it the death knell of Labour in that not only have they not delivered on the basic promise they gave to the electorate during the campaign, but they are now being out-manoeuvred daily, and we have the political gaffe of the Leader, Deputy O'Leary, to prove that.

Will the taxpayers be better off if these tax bands are changed? I do not know who is going to be better off, but certainly the needy will not. The gains that will be achieved by whatever group of people achieve them will be eliminated subsequently by income levies. This country has had bad experiences in the past about levies but the Coalition have not learned the lesson. Therefore, they are going to have the levies again but this time they will be income levies and these income levies will pay for the tax cuts. Also we are going to have increased health charges and a reduction in the mortgage interest tax relief, but the levies are the most important.

It is in the Fine Gael pre-election manifesto that we get an insight into the extent these levies might go, and they will achieve nothing for the vast majority of the people and certainly nothing for the needy in so far as promoting tax reform or tax restructuring is concerned. That manifesto stated unambiguously that 2.5 per cent would be levied on all incomes — it is important that we appreciate that it is on gross income — and 4.75 per cent on incomes over £8,500. I do not know what one would call that kind of levy, but to my humble way of thinking it is income tax in another form pure and simple. The only difficulty is that at least in income tax you get your allowance but these levies are to be put on gross income. All your income for the year is to be subjected to these new tax levies.

There is to be a 1.5 per cent health charge on all income also, and 1 per cent on all income to support the Youth Employment Scheme. Of them all I prefer to support the latter, the 1 per cent for the Youth Employment Scheme if it generates money and if that is the only way it can be got for that cause. People are prepared to give support to generating jobs and providing job opportunities for the youth of this country. If the money has to be found, let us find it. A PRSI levy of 3 per cent is proposed on incomes over £8,500. The present charge applies to income up to £8,000.

What is the grand total of these levies, the other word for income tax for 1981-style Coalition? It is 2.5 per cent on income under £8,500 and 7.25 per cent total additional levy on income over £8,500. That is what is in store and not on my say-so. That figure was not dreamed up by Deputy Padraig Flynn. These are figures drawn up in the pre-election manifesto of the Fine Gael Party. The Labour Party were not in favour of that, but they have no choice now, as is obvious from the U-turn their Leader has been taking concerning some of the tax proposals. Therefore, this programme will be implemented. The only people who can stop it are the other party still looking for a name, but they will not do it because they have been given a promise of a programme of legislative goodies some of which are going to go wrong right from day one, starting today.

It is important to remember that these levies are on all income in addition to direct taxation and in addition also to the indirect taxation increases perpetrated by the Coalition since they came to office. There are VAT increases across the board. I thought it most telling to hear a young lady on television last night or the night before talking about 25 per cent VAT paid on some equipment for the handicapped. Somebody asked her if it was essential for the needy. "Well, it is in the luxury bracket if it is 25 per cent", she said. We are not talking about the luxury bracket now, we are talking about the VAT increases in the everyday bracket, the 10 per cent moved to 15 per cent. There are enormous increases in excise duties and these increases apply to everybody including the needy, the less well off, those whom Fine Gael and the Labour Party especially should be beating their breasts about in here, whatever about the other party.

It is important to remember that the IMF came over here to have a routine look at the economy some time ago. Of course, it was projected to the general public that the IMF had to be called in. A serious situation had to be tackled and the experts from abroad had to come along to prognosticate what might or might not happen and to deal with the tremendous crisis which the Taoiseach last week said had now been eliminated. The slippery slope is no longer there, but the IMF were here to consider the economic situation. Of course, they were here for a routine look. They come regularly and have been coming for years. It is easy enough to get a banker, especially in the national banks, to say anything you want, especially if you are borrowing. Your own bank manager will tell you that you are spending too much, that you must cut back. You would not expect anything else from the bankers, would you?

When Fine Gael were in opposition they were always telling us that the IMF were knocking at the door, they were breathing down our necks, they were about to take us over and to close the shutters on us. If the IMF have made a recent recommendation to this Government to stall on their tax structuring and restructuring and their new tax reforms, why will the Government not listen to them, if they have such great confidence in their ability to deal with all matters, if they were being held up as the paragons of economic virtue here for a number of years? We should be careful about them. They have the key to the finances and future growth and development of the country. Did the IMF warn of the inflationary aspects of the new proposals or were they merely flying the kite for the Government because they had been told that there was a serious situation and like any good bank manager said, "We suggest that you cut back on expenditure and watch the deficit"? The two are not compatible; otherwise the Government would be taking their advice. They are not taking it, they are flying in the face of it. Of course, the Labour Party take that advice because they are not on public record before the election as saying that they would do this thing. The Fine Gael commitment to the electorate is firm, conclusive and final. Therefore, irrespective of what anybody says, ex-Ministers for Finance, the IMF, the ESRI or anybody else, we are locked into that commitment now and down that road we will go irrespective of the results. The Coalition know well that they will do it and Fianna Fáil will pay for it.

Everybody, including the IMF, knows that these income transfers and tax changes were nothing more than election stunts. This was the package at the time and it had a limited success. The stark reality is that it is economic nonsense. It is encouraging more pressure for increased pay and it is making it impossible for this Government today to achieve industrial peace or indeed to achieve any kind of settlement with the unions. Whatever about tax changes, when you consider the price tag of £9.60 on the housewife Irish style, you begin to get some inkling of the depths of economic nonsense to which this Government are sinking.

Lest anybody should accuse me of not being in favour of housewives getting £9.60 per week let me say that on the contrary, I would love to see all housewives getting £19 or £90 — pick a figure — they are entitled to it and I would not put a price tag on their worth. The sum of £9.60 is an insult to them. But the Government are committed to giving it. People are saying it is not wise, that there are too many anomalies, that it is dangerous politically and economically. The Labour Party might say it should not be done at this time, some of the backbenchers who know the score might settle but the Government are locked into this situation because their credibility is at stake if they do not implement it. When a Government lose credibility they lose everything. It is like taking away a man's reputation, you leave him stripped. If you take credibility away from a Government they are as naked as a new-born babe.

We are all waiting to see how it will be done. Who is going to get £9.60? Will the weaker sections of the community, those most in need, get it? As I understand it, they will not but I am speaking from little knowledge because nobody on the Government side has categorically stated how the scheme will work and who will benefit from it. We know why — because they are at loggerheads, not only with themselves, but with those who are going to administer the scheme. If what we are told is true, the wife whose husband is in receipt of social welfare will not get it because he is not paying tax, he is on the dole, drawing disability or unemployment benefit. Because he pays no tax his wife is not entitled to this sum. The wife of the old age pensioner cannot get it because, in the vast majority of cases, he is not paying tax either. Certainly the wives of non-contributory pensioners, who are most in need, will not benefit from the scheme. I presume widows will not get it as very few of them are paying tax. Wives of small farmers will not get it because they cannot afford to pay tax. They are on subsistence level. Wives of small income earners will not get it either because their husbands are not paying enough tax to warrant the credit being transferred.

I presume the wives of small businessmen will not get it either because their husbands pay tax back over three or four years and the Government would not be able to administer that in advance of the scheme. Who is going to benefit? Only well-off people will benefit, wives of well-off people who, by and large, can afford to stay at home. I put this very succinctly to people during the election campaign and, because I felt I understood its implications, we were able to tell some people in the west that this was the case and that the poorer sections would not benefit under this scheme. What happened in the cities? Housewives were conned into believing they would get it. It was also stated that it would cost the Exchequer nothing to implement the scheme. Of course it would cost nothing if you are taking £9.60, £19 or £29 out of a husband's pay packet and giving it to his wife. That will cost nothing in tax although there will be administrative costs which will be met by further indirect taxation. Why not? It is all being met by indirect taxation. The Government are on record as saying that is how these schemes will be funded. Is it a simple transfer of part of the husband's income, without his permission, to his spouse? Will somebody state unequivocally if this is so?

Mr. G. Mitchell

I would like to ask the Chair, on a point of order, if it is in order to speak at such length because other Deputies are waiting to speak?

An Leas-Cheann Comhairle

In a debate of this kind, a Deputy may speak for as long as he or she wishes, provided he or she is within Standing Orders.

The purchasing power of disposable income has been considerably reduced since the last session — some say by about 13 per cent. The economists tell us that next year there could be a reduction of 16 per cent. We could say that this country is at present being run by economists, not politicians. Those economists, quite normally and naturally, decided to commission other economists to do some thinking on their behalf — the three wise men, Irish style.

Mr. G. Mitchell

Christmas is coming.

Mr. Flynn

They dealt with the committee on cost and competiveness. Those three wise men were not like the Magi, who were wise — they brought presents and tidings of great joy. More importantly, those three wise men of the New Testament were waylaid by King Herod who tried to get them to deviate from their line of action but they were not easily put off. They carried on. They were wise in the real sense of the word. They brought their presents, tidings of great joy and went back another way. The three wise men, Irish-style 1981, were waylaid by the Coalition Government. They were brought in and told about the volatility of economic matters in other parts of the world and the rate of exchange. The wise men were sent scuttling. They changed their package from 9 per cent to 6¼ per cent or 6½ per cent because they were told to do so. There is no similarity between the Wise Men in the Bible and the wise men who have been making recommendations in this country. That is a pity.

If the tax strategy of the July budget is to continue, the needy will suffer most and there will be an end to a practice which existed for many years, that is progressive taxation where the needy got most help and taxation bit hardest at the top of the scale. That has gone out the window. The idea now is to savage the worker while at the same time hit the wealthy, but it should be the other way round. The Coalition have no compassion for the poor. How could they when one considers that they decided to increase the VAT on the 10 per cent band, raising it to 15 per cent? These are the everyday purchases of the ordinary people. The Government did not single out the 25 per cent tax band and the Minister for Finance told us why. He said it would not bring in sufficient money quickly enough. He is on record as saying he wanted to introduce measures which would bring in the greatest amount of money in the shortest possible time. If that is not hitting at the needy, I do not know what is.

They also decided to increase health charges and they have ideas about education, transport and so on, about all the everyday activities of the ordinary people. They also decided to hit the motorist. When people begin to forget what this Government have done it is well to remind them. Motoring costs are being pushed up inexorably. There were VAT increases on the cost of the car, on servicing cars and on car parts. Motor tax was reintroduced. There were increases on petrol, excise duties and insurance. I realise mentioning this list of increases is very tedious for Deputy Kemmy and Deputies in the other parties, but they should be resisting these increases at every juncture. Deputy Kemmy cannot, because he is locked into a programme of legislative goodies which will not be delivered.

Before the budget the Government got 31.2 per cent of the value of the new car; they now get 37.5 per cent. Car parts came under the hammer and the duty is now 37½ per cent plus 15 per cent VAT. The strategy of the Coalition had to encompass so many ideologies that we are only now beginning to see how truly incompatible are the partners in this inglorious Government. They are ideological opposites. I will give a few examples to prove what I say is accurate. Earlier we had the peculiar "divi-up" of the Department of Industry and Commerce between the Tánaiste and the Minister for Industry——

An Leas-Cheann Comhairle

The Chair asks the Deputy not to go too deeply into political ideologies. Could he stay with the taxation provisions of the Bill?

Mr. Flynn

Ideologies are the basis of fundamental Government policy. The Coalition have to deal with ideologies which are diametrically opposed and they try to accommodate each other in this kind of package——

An Leas-Cheann Comhairle

The Chair will be tolerant provided the Deputy can relate these ideologies to the taxation provisions.

Mr. Flynn

They are important because the taxation issues are the culmination of the deal done between the different ideologies expressed by the various components of the Coalition.

Recently Deputy Kemmy attacked the Government social policy in a speech he should have made in Claremorris. This speech was printed and circulated but he did not make it and I will tell somebody some time the reason why. He is on record as having made this speech and it is stated as his policy. He challenged the right of the homeless to State-aided housing; he challenged the right of the sick to subsidised treatment; he challenged the right of people to free education and he challenged the right of Government created jobs for the unemployed. This is in writing and I have the document here if anybody wishes to challenge what I am saying. If that is an indication of Government policy and Government thinking, it is a no hope situation for the weaker sections of our community.

How can Labour live with that kind of ideology, with that kind of expression of Fine Gael thought? If that is not an example of the most ultra-right wing monetarism and conservatism ever heard, what is? Surely there is nothing more fundamental to a Labour man than providing houses, whether by grant or by sudsidy, to those unable to provide their own houses?

During my presence the Deputy has been relating his comments to the taxation proposals in the Bill.

Mr. Gene Fitzgerald

On a point of order, is a Deputy allowed to criticise the Chair in this manner?

An Leas-Cheann Comhairle

The Deputy is entitled to ask questions of the Chair.

Mr. Gene Fitzgerald

I do not deny any Deputy the right to ask questions, but Deputy Mitchell criticised the Chair's handling of the debate.

An Leas-Cheann Comhairle

The Chair took it that Deputy Mitchell raised a point of order, which would be his entitlement. Deputy Flynn to proceed without interruption.

Mr. Flynn

I can understand Deputy Mitchell's anxiety to make his maiden speech but he must understand that other Members are entitled to their opportunity to speak. There is no time limit on this debate.

Mr. Kemmy

It is very boring listening to the Deputy.

Mr. Flynn

The shambles being created in the economy gives me so much ammunition that it would not be difficult——

(Interruptions.)

An Leas-Cheann Comhairle

Deputy Brady should not speak from the lobby of the House.

Mr. Flynn

I have been speaking since ten minutes past eleven but everything I have said has been relevant. When the needle begins to cut deep into the flesh of the partners they would like to see me cut adrift by the Chair.

An Leas-Cheann Comhairle

Deputy Flynn will accept that there are times when he is sailing dangerously close to irrelevancy and I would ask him to proceed as relevantly as possible.

Mr. Flynn

Mr. Spring

The Deputy is good at that.

Mr. Flynn

I should like to refer to a statement on 3 July about recruitment in the public service. It had been said in the budget speech on 21 July that there would be an embargo on recruitment in the public service, to apply throughout the State, semi-State and local authority services, including health boards. Every activity in Irish public life was to come under that embargo as from a certain date. I cannot think of any more retrograde step ever taken than that. It has had a detrimental effect not just in the matter of job opportunities, job creation, but on the hopes and aspirations of young people. On top of that it has put in jeopardy the future development programmes of State and semi-State bodies and local authorities. These bodies have had to shelve development programmes until some future occasion when they can be re-activated under Fianna Fáil.

I wonder if anybody on that side of the House realises the terrible effects that embargo has had, particularly on school leavers. It has thrown employment figures way out of line, it has left a desperate situation for young people not only in secondary and university institutions but also for those who attend technological institutes. Parents are asking why they should pay vast sums of money to have their children educated when there will be no job opportunities because of the Government's stranglehold on recruitment, on the opportunities usually there to absorb school leavers.

It has had an enormous effect as well on the number of services that can be provided by local authorities. Members of local authorities and health boards appreciate this and that is why they have been holding their budget meetings behind closed doors, in committee. They are broke. They have been begging for funds to maintain their ordinary services until the end of the year but the Government will not give them that money. If, as the Taoiseach has said, everything is in check and that these bodies have nothing to worry about, why has this money to be re-assigned to restructure daft tax reforms and daft payments to certain individuals.

I referred earlier to the seduction of the housewives of Ireland with this £9.60 payment, which will put a price tag on their shoulders which has no relevance to sane economic thought. This attitude to public service recruitment is a well-known short-term technique used successfully before by Coalition Governments. They want to stall approvals. They leave certain sectors of the public service short staffed so that there will be a stalling of departmental activity and the money to meet new job approvals will not have to be put up. The same applies to local authorities and health boards, and the result is a process of grinding down economic activity and development programmes.

This Government have destroyed the people's national spirit. The economic proposals outlined last July and the future ones they are thinking about are being objected to by their backbenchers and gurus who have recommended that they do not proceed with them. The rollercoaster of the Coalition is out of control and it is leading to economic chaos. The electorate, the passengers on that rollercoaster, have to stand by while the driver stands at one end and the engineer at the other, squabbling about who will pull which lever on that merry-go-round. The people of Ireland have had enough of it, as any public representative will learn if he seeks the opinions of the electorate. He will be told that coalitions have not worked in the past and the Coalition are not working on this occasion. They are looking forward to the day when the Coalition will be routed out of Irish political life.

Mr. G. Mitchell

The only accuracy I can find in Deputy Flynn's long speech is that the taxpayer must pay for everything, including the cost of borrowing. The attitude of this Government is that not only should nonsensical borrowing be stopped but that the sections of the taxpaying community who can best afford to do so should be required to pay. Working according to the truism that taxpayers should have to pay for the facilities provided for them, this Government are concerned that there should be a more even distribution of the tax burden. In dealing with the Finance Bill it is necessary to look at the situation that arose which required the implementation of the provisions of this Bill. I will give some of the figures which gave rise to the present predicament.

At the time of the 1977 General Election the National Coalition, led by Deputy Cosgrave, had to face the first real recession of modern times. They did not have experience, and the advantage of it, of having had to deal with the sort of recession which beset us. They did not have an educated public sympathy behind them. Nevertheless, that Government set about putting the country's economy on a proper footing. They were berated by an even less sympathetic Opposition than they are faced with now, an Opposition who lacked knowledge of the problems and were unable to comprehend the techniques required for good management of the economy in such circumstances. That Opposition formed the next Government and, as a result of the most outrageous promises, false promises, ever made to an electorate in a Western style democracy, they succeded in obtaining possibly the largest Parliamentary majority in a Western style democracy. That Opposition had no confidence in themselves and believed, quite justifiably, that the electorate would never consider putting them in Government in the first place. They never thought they would have to implement the outrageous promises they made. It is from that starting point that this Bill has been brought forward to try to deal with those problems.

That background and that batch of promises contributed to the present very worrying state of the nation's finances. The National Coalition brought the country through the first modern recession and at the time of dissolution in 1977 unemployment was 106,000 and inflation 6¼ per cent. At that time the budget deficit was £201 million. Lest any Member states, like the last speaker, that I am taking these figures from my head or, perhaps, from a telephone directory, I should like to quote from the Economic Review and Outlook, July 1978, under the heading of “Prices”. That review states:

There was a significant decline in the rate of price inflation in 1977 with the Consumer Price index rising on average of 13½ per cent compared with 18 per cent in 1976 and 21 per cent in 1975. The rate of increase was particularly low in the second half of the year. In the six months to November the index rose by only 2¾ per cent, about one-third of the increase in the preceding half-year. The improvement in the rate of inflation continued in the first half of 1978. In the twelve months to May inflation had fallen to 6¼ per cent, the lowest increase for over eight years.

That was a remarkable performance by a courageous and talented Government but that was not followed on and this is the problem we find ourselves with now. If the incoming Government of whatever political shade, had followed on and built on the very good economic performance at that time we would not be in the position we are in now. The current equivalent figures, at least current at the time of the change of Government which is relevant to the introduction of this Bill, whatever about the Opposition blaming the Government about what has happened in the meantime, something I dispute and something any person wishing to offer logical debate would dispute, cannot be blamed on the Government because those figures existed when they took office in June.

At the time the Coalition took office in June there were 124,700 people unemployed, despite the fact that jobs had been created where none existed and that people had been pulled into the public sector lending itself to further retardation in bureaucracy which is in need already of energetic reform. The figure for unemployment increased by 40 per cent alone during the period of office of Deputy Haughey as Taoiseach. That is an undeniable fact. Inflation when we took office was 21 per cent and the deficit for the year would have been £945 million if corrective action had not been taken there and then. The figures speak for themselves. The January budget set the overall Exchequer borrowing requirement at £1,296 million or 13 per cent of GNP. Of this figure £515 million was needed to finance the current deficit. If corrective action had not been taken that figure would have been £945 million, or almost double. Such is the level of tomfoolery and naked subterfuge engaged in by the last Government with resulting disastrous consequences on the economy that excesses on capital expenditure would, if unchecked, have brought the overall Exchequer borrowings to almost £2,000 million or 20 per cent of GNP, not 13 per cent which had been forecast less than six months previously.

I do not believe I require to say more on this matter. The figures I have given can be checked and I challenge any Member to deny them. I challenge those who feel it necessary to look at this debate constructively to look at facts. I should like to quote, briefly, from the statement of the then Minister for Finance on 27 February 1980. The Minister for Finance, Deputy O'Kennedy, in introducing the budget said, under the heading of "General Approach to Budgetary Aggregates in 1980":

Borrowing, the balance of payments and the external reserves are all interlinked. Government borrowing allows a higher level of expenditure in the economy, which generates a demand for further imports and adds to the external deficit. A reduction in borrowing is required in the short-term in order to help reduce the balance of payments deficit to a sustainable size.

Fianna Fáil would have us believe that that was never their policy, that they never felt that borrowing had to be brought into check. If that is the case I should like to ask those interested why any reasonable party, with a 20 seat majority, who were not concerned about borrowing would run away from the scene with 18 months left to run in office. I doubt if that would have happened in any other Western democracy.

It is amusing but nonetheless disturbing to hear Deputies opposite lecture the Independent Members, and the Government, on matters relating to Government finances when the state of those finances is the direct result of irresponsible indecision on the part of those Deputies and in particular, because of reckless behaviour in hiding those figures until after the general election, an election which need not have been held for a further 18 months. The previous Government, with a direct majority of 20 Deputies, had a golden opportunity to take whatever steps were necessary to put matters right but instead we got incompetence, arrogance and Ministers appointed on the basis of the way they voted rather than on ability.

Under the heading of "Indirect Taxation" in the same speech I referred to, Deputy O'Kennedy went on to say, as reported at column 737 of the Official Report of 27 February 1980:

There is of course no escaping the fact that the income tax improvements and social welfare improvements being announced today must be met from taxation and the only realistic source for the vast bulk of this is indirect taxation. There is no scope through other forms of income taxation or of direct taxation otherwise for raising the amounts involved.

Deputies opposite have forgotten that. They have forgotten that it was put on the record of the House. They must not forget also that in that same speech the Minister for Finance, under the heading of "Food Subsidies", said:

It continues to be the Government's belief that food subsidies applying as they do irrespective of individual need do not sufficiently discriminate in favour of the less well-off sections of the community.

That was the Minister's excuse for going on to say:

We gave very full consideration, therefore, to the question of further reducing them in line with our declared intentions.

The intention was to reduce food subsidies which were reintroduced on the eve of an election which that Government had to win, not because they had to stay in government but because the leader of the party had to stay at the top. If they had lost that by-election they were in serious trouble and they knew it. The last Government, because of the opportunities they had, because of the strength dealing seriously with the problems which any economy faces from time to time will go down as one of the most dreadful Governments of all time. I do not say that Fianna Fáil Governments have all been dreadful just because they are opposite to me. There have been some very good Fianna Fáil Governments, one of them being a minority Government like this one. When people look back in history and ask who took the necessary steps to look after the best interests of the finances of the country the last Government will not be among those who will be getting the laurels.

The Deputies opposite have the temerity to throw out figures which are totally irrelevant and introduce arguments which are absolutely without substance in that they cannot be backed up with facts and figures. As Minister for Finance, Deputy Gene Fitzgerald who was here a short while ago, said in the budget statement of 1981 that it would be contrary to Government policy to increase the rates of direct tax at that time. In 1981 Fianna Fáil felt it was necessary not to increase direct taxation — the taxpayer was already overburdened because of the small base — but instead go for indirect taxation, a policy for which they are now berating the present Government. There are a number of other things which Deputy Fitzgerald said about the balance of payments and energy conservation and, because of those needs, the need for increases in the price of petrol, tobacco, beer and spirits, which they are now saying are disastrous increases brought about by the policy of the present Government. If one looks at some of the facts and figures behind my argument it will be seen that the Deputies opposite are making hollow, empty speeches to an empty House. In 1977, 32 factories closed, causing 3,332 redundancies. In 1978, 41 factories closed, causing 2,824 redundancies. In 1979,37 factories closed, causing 2,294 redundancies; and, in 1980,82 factories closed, causing 4,158 redundancies.

Mr. Keegan

What was the 1981 figure?

Mr. G. Mitchell

I will be pleased to supply the Deputy with the 1981 figures. From January to June 1981 there were 40 closures, causing 3,279 redundancies. If that rate had continued for the whole year it would have brought the figure to an all-time high of 6,500. I hope that meets the Deputy's requirement. Those factories closed because of action taken by the Government of the day. Deputies rise in this House and express concern about Tuam, and rightly so. If it was affecting employment in my constituency I would be very concerned about it. But let us be honest. Tuam is not the only centre in the country. What about the other factories which have been closed causing loss of employment through the years of office of the last Government? It is the policy of this Government to try to put the finances of the State in such order that there will be a reversal of the closures and that we will have a surplus of new factories over the number of closures in a period, thus giving greater employment. It is for that reason that the Government are introducing the Youth Employment Scheme, which will put a levy on the wealthy in order to contribute to the work prospects of our youth population, the fastest growing in western Europe, coming out of school and institutions with no job prospects. As a former youth leader, I support that. These are the policies that have been needed for some time and I make no apology for supporting and voting for a Government Bill which provides for youth employment.

One of the things that disturbs me greatly is that the media have not, for whatever reason, conveyed the situation as it is to the public at large. What we have been getting is propaganda. I suppose I could be accused of putting forward Fine Gael's propaganda now. But surely somewhere there is the possibility of conveying to the public the situation as it is and why the steps which are being taken are in their best interests. If we continue for purely party reasons to undermine each other, the public will be the losers, because we are going to pursue economic policies which are not in their best interests. The present policies are in their best interests. Independent commentators who have spoken on this matter — the Governor of the Central Bank, Independent Senators who are not members of any political party, business leaders in the community who have nothing to lose by stating the situation as it is— have come out and said that these policies are necessary. This morning's newscast on the national radio station carried the NESC report which also said that the Government were right. They said that borrowing for day to day expenses must be reversed. Somebody said that the difference between Fianna Fáil and Fine Gael is that we do not want to borrow and Fianna Fáil do want to borrow, but they can justify the borrowing because it keeps us going and at the end of the day everything is rosy. The real difference in the economic sense is that the Government are opposed to borrowing for day to day purposes, which is akin to throwing £1 notes off O'Connell Bridge and saying goodbye to them. The last Government knew that that could not continue because it would bleed our economic resources and lead to disaster. I challenge anybody to say that that is not the case. I want to make it clear that that is where we differ from Fianna Fáil. We do not want to borrow for day to day purposes because it is not in the interests of the people that we were elected to serve.

I would like to come to the contents of the Minister's budget speech. It is with regret that the Government have been compelled to adjust certain taxes and to take steps to control budget finances. Many of these steps are not going to be popular. Nobody is asked to accept them as being popular. They may not even be popular with Members of this House. But the Government were not elected to do what is popular but to do what is in the best interests not only of that portion of the electorate which sent us in but of the whole country. If the real arguments for those steps were communicated to the public they would accept that the Government are doing what is necessary and right. It would have been simple for the Government to have ignored the problem and introduced a couple of popular measures and then to call a quick election. But the Government did not do it that. The public must ask themselves why they did not do it. They did not do it because it would not have been in the best interests of the public to do it. That is where the commitment of this Government is shown. We cannot afford to let the finances of the country dry up, with resulting widespread chaos and hardship, for the sake of being popular. Unfortunately, this attitude has prevailed for too long. The overriding aim is to do our best for the country and to try to give equal opportunities and decent living standards to all our citizens, including the farmers and the industrial workers, but excluding nobody. There are many excellent proposals contained in the budget. The incentives for agriculture, of which I have particular knowledge having worked with a farming organisation for some time, with their resulting effect on the whole community, are most welcome.

Agriculture is important to all of us, even to those who may not have farmers in their constituencies. There are very few small farmers in Dublin South-Central but I recognise, particularly from my time in the agricultural sector, that agriculture is important to the community, that approaching 50 per cent of our exports depend on agriculture and about the same percentage of our work force, direct or indirect, depend on agriculture. I welcome the incentives the Minister has announced but I also say, in fairness and justice, that not only must the industrial worker, the white collar worker and every other worker tighten his belt but farmers, as the Minister for Agriculture said, must also tighten their belts. The whole community must face up to the realities and not expect one sector of the community to carry the can. The social welfare increases for a wide range of people in need are very welcome. They are in excess of the increases in indirect taxation and I welcome them.

I want to say a few words about the reforms promised in Government accounting and planning with the greater involvement of Deputies and the public in this area. I was pleased to hear the Minister say this when he introduced this Bill to the House. I particularly welcome the Minister's announcement to reform financial planning procedures so that proposals for public expenditure are presented to and debated by Dáil Éireann in a timely and businesslike way. The publication of public expenditure Estimates in the autumn preceding the commencement of the financial year is a very welcome innovation. A specific Dáil debate on the Government's capital expenditure and borrowing plans is also a very welcome innovation not only because the Government are introducing it but as a private Member of the House I feel very strongly that the powers of private Members from any side have been eroded. The more involvement there is for the private Member from whatever party in debate, committee work and any other sphere the better it will be for the people we represent and from whom we have got a mandate.

The improvement in the format of the Estimates and the improvement of procedure relating to the presentation and debating of the various annual reports of State-sponsored bodies to the Oireachtas are welcome innovations. It is time we interested ourselves in more of these spending bodies, not only the Tuam factory but all the other factories. If the Government are putting funds into a lossmaker for some social reason let us examine the position and be prepared to say that is the reason because sometimes that can serve the greater good.

I was very pleased to hear the Minister announce that Dáil reform and facilities for Deputies will be given priority. I would like to use this opportunity to say that as a backbencher and a new Member of Dáil Éireann. I am very disappointed, with the facilities which exist for Members. I sympathise with Members who have been here for many years. I know that the facilities have been greatly improved. I know that when Deputy Haughey was Taoiseach he took certain initiatives and the present Taoiseach is continuing those initiatives. I feel disappointed at the role of the legislator and I feel that has to be developed. I am not talking about facilities that increase the size of the Deputy's wallet or financial increases. I am talking about facilities to do the job we were sent here to do, to keep in touch with the people, to look at the legislative proposals which come before us, do some research, and bring the various Government Departments and the various State bodies to account in a reasoned and positive way. I believe those facilities are not there.

It was through the initiative of certain Deputies over the years and through the use of their own private resources that they have been able to participate in that role. Now that there are more full-time Deputies who are intent on staying in touch and working on behalf of the people who sent them here I feel the facilities in this House are appalling. There are former Government Ministers in offices which no junior civil servants would accept. There are Deputies sharing offices which no junior civil servants would accept. I welcome the changes that are being made and the changes that are being pursued. The Minister for Finance will certainly have my support for the Dáil reform measures he has promised will come before us. I believe all sides of the House agree that those are overdue.

The Government programme to include a £5 million levy on banks next December is appropriate and is long overdue. The sectors of the community which can afford to make a greater contribution to the national need must be obliged to do so. I hope this is the thin edge of the wedge and that those institutions which for many years have been getting away without paying their fair contribution will now be obliged to do so. We must remember that in many cases those institutions who draw their employees from the four corners of the country bring into Dublin a very substantial number of people. They add to the commercial life of the city but they also present problems which are particular to the banking sphere. One of those is accommodation. It is left to local authorities to house those people while they are in Dublin. I believe banks should be obliged to take their responsibilities seriously in relation to those people. If they are not prepared to do so the funds which will be extracted from them should be used for the benefit of the large number of young people who are brought to Dublin and are left in offices to fend for themselves.

The action of the previous Government in abolishing food subsidies and then restoring them shortly before the election is deplorable, and everybody has seen through it. After making all sorts of arguments against food subsidies they proceeded to reintroduce them on the eve of the election. The Government have committed £11 million to assist those members of the community who are most in need. On top of that they have introduced the combat poverty contigency provision of £100,000 which I hope will be increased as finances allow and before too long. The allocation of £50,000 extra for modification work necessary to afford facilities for the disabled in public buildings is timely as this is the year of the disabled, as well as the commitment to implement the 3 per cent employment quota for disabled people in the public sector. I hope the Government will oblige local authorities to adhere to the same criterion. I know many local authorities have already decided to do this.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.

Dáil Éireann debate - Wednesday, 28 Oct 1981

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

Dáil Éireann debate -
Wednesday, 28 Oct 1981