Last night when I reported progress I indicated that it would be necessary to have a planned programme. It would appear that cuts in expenditure which the Minister for Finance indicated when he introduced his July budget have been far-reaching. It could be a false economy to make cuts in areas which are productive. I refer to areas such as forestry where there are considerable cutbacks. The Minister would be well advised to remember that in the Department of Finance there are pennypinching people sharpening their pencils all year identifying areas where money can be spared. This is contrary to the policies we pursued. I had a commitment from the previous Cabinet for all the money I needed to buy any land I wanted for planting, particularly in the west.
Finance (No. 2) Bill, 1981: Second Stage (Resumed).
Could we have order, please, and respect for the speaker?
I also had a commitment for money for harvesting and roads to ensure that a planned programme could go ahead. I should like to remind the Minister that any failure or dilution of this programme will undermine the whole industry. We will have a valley period in timber production that will not be remedied overnight. The planned programme which took years to establish could now be interrupted by giving in to people who want to make cuts at all costs.
One time we felt we were so tied to British sterling that if Britain sneezed we got pneumonia. We thought when we joined the EMS we would be rid of that but there is still the attitude in some quarters that whatever is done in Britain must be followed here. The Thatcherism pursued in the budget is evident. Mrs. Thatcher's policies have been in operation for three years and have proven to be a failure. I agree that our situation is unusual in that we have both inflation and recession. Mrs. Thatcher has decided on a programme of severe cutbacks in public spending. In Government and faced with the same recession we tried to bolster the economy with the pruning of public spending. This was the more human solution and one that had an equal chance of success. It had the added advantage that, while we did not put so many people out of work, we were ready to take advantage of any upswing in the economy.
In order to distract attention from the failure of the Government to deal with the twin problems of inflation and unemployment, our two greatest problems, the Taoiseach attempted to shift the attention of the public to other matters. Consequently, he played on the sense of nationalism that is inherent in Irish people and brought up the very emotive subject of the unification of Ireland. I suppose with a name like the famous Geraldines it was only natural that he would think of his Norman ancestors and show that he was a true descendant of these shining knights who came out from the Welsh marshes and sallied forth on their crusade in 1169. In Kildare we are proud of the Geraldines. It was said of Gearóid Mór Mac Gearailt that, since all Ireland could not rule him, he should be allowed to rule all Ireland. Our Taoiseach must consider himself to be cast in the same mould, but his ancestors never failed to take up a challenge. However, when the gauntlet was thrown down to our Geraldine last week in regard to Cavan-Monaghan, he failed to take up the challenge. So, for the first time, it can be said that the proud shield of the Geraldines was tarnished with the white feather or, to put it another way, we now have Gearóid an Chleite Bháin or Gearóid funkgerald. After three months there is a reluctance on the part of the Government to allow the public to judge their performance. I am sure that the real knight on the backbenches, Sir Oliver, the holy knight if not the silent knight, is disturbed and unhappy.
Judging from the remarks of the Minister for Agriculture in this debate, it appears that there is a great lack of planning so far as his Department are concerned. An example of this situation is the Government's attitude in regard to the sugar plant at Tuam. Beet growing has a distinct role in crop rotation and any farmer planning rotation must plan for three or four years ahead. Apart altogether from the west and the social need to provide employment there, this reluctance to utilise a national, natural and renewable resource indicates very bad planning and no social planning. It was our intention to endeavour to expand beet acreage in the west and to encourage farmers in other areas also to increase their acreage of beet.
When the Minister introduced his budget he indicated that he was providing an additional £30 million for housing. We would have provided much more for this purpose. The amount being provided is a mere pittance. In Droichead Nua, for example, 300 houses are needed to satisfy the need there. The officials of Kildare County Council expected that the housing scheme would start there this year but the fact is that there have been no starts on housing schemes in Kildare since July. The money that has been provided is sufficient only to allow the council to undertake the building of 13 isolated houses. Not only is this disruptive to contractors and to those depending on the industry for jobs but it leaves many people in dire need of housing and we have a duty to house those people.
It is hypocrisy for the Minister for Finance to talk of the burden of debt we will leave to the next generation as a result of Fianna Fáil policies if we condemn the present generation to live in caravans in overcrowded, unhealthy and unhygienic conditions. We cannot expect those people who should be housed by local authorities to take on the burden of the big debt of housing themselves, especially when we also crucify them by removing subsidies from mortgage repayments. Despite the increase of more than 3 per cent in mortgage repayments, we know now that the Minister has not met the building societies during his three months in office. That, in itself, is an indication that the Government are not dealing with housing as a priority issue. Housing is a social need. It is a most pressing need for many people. Lack of proper housing is the cause of many problems. I do not know of any industry other than housing in which one can convert a green field situation into a situation in which jobs are provided overnight, but in order to do this a big cash injection is needed. This is very evident to us in Kildare, a county bordering Dublin and which has a spill-out from Dublin. I do not understand how anybody on the Government side can reconcile his social conscience so far as this problem is concerned. For the past eight years I have been listening to one man who, though on the side-line, was full of ideas; but now that he has got his chance there is no performance at all — an indication again that talk is cheap but that action is something very different.
I should like to mention another matter which, though it may seem small, is interesting and one which has got a good deal of publicity. Fianna Fáil have been accused of promising to provide sport and amenity complexes in certain areas but of failing in office to provide the necessary moneys for this purpose. I should like to refer to the situation in Celbridge in this regard. Before the election I was in a position to announce that a sports complex would be built there and that a grant of £120,000 would be made available this year for this purpose. In Celbridge people played football on the streets in order to highlight their need for a sports complex. The small local hall is used to 100 per cent capacity. On the nights that I go there I see brownies, ladies having keep-fit classes, boxing and soccer clubs and others using it. That is one reason why Celbridge was earmarked in May or June last year as an area where this was needed.
In 1980-81 three places in County Kildare were earmarked — Leixlip, Kilcullen and Droichead Nua — for the same treatment. That was not an election year and nobody could identify any pocket with money in it which would help to build those complexes, but money was found. In those three cases the intention was announced before there was any talk of an election and the buildings were complete, almost complete or in course of construction. I believe that we would have fulfilled our promise and would have built the sport complex and provided the grants for it in Celbridge too. This matter has been used as political propaganda by the present Minister of State. The matter has not been finalised and there is a vacuum in Celbridge in that they are not quite sure whether the money will be granted. I believe that it will. It should be granted. This matter should not have been made the political football that the Coalition made of it.
A matter which took our attention while we were in office was ESB charges. There were numerous requests for an increase per unit in ESB prices and our policy was to keep down the cost of electricity to consumers. The Minister in his budget speech said:
The decision of the previous Government to postpone increases in ESB charges and CIE rates and fares, which had been approved by the National Prices Commission and justified by actual increases in costs, severely disrupted the finances of both CIE and the ESB. It would have required the companies to be compensated by the Government if they were not to be permanently damaged by loss of revenue.
That is a very serious indictment of Fianna Fáil because we held down the prices per unit of electricity while we were there. Apparently on the first occasion that the request came forward to the new Minister for Finance he said they should go ahead with the increase. Subsequently it seemed from the ESB report that, despite writing off certain depreciation of machinery at perhaps double what it should be, the ESB succeeded in making £6 million profit last year. Therefore, the public might well ask themselves who had the interest of the people at heart or who was easily fooled or badly advised with regard to ESB prices.
Social welfare recipients took a lot of attention also in the speech that accompanied the budget in which it was indicated that any increase which the measures being taken would impose on the cost of living would be made good by increases. The 10p increase — even less in some cases — is derisory. Now even the old age pensioners realise that they were duped. The Coalition admitted that their budgetary policy would add to inflation but that 3 per cent would offset this. Those who have suffered most by the increases are the lower paid workers and social welfare recipients who have suffered the loss in their real income because of the programme being pursued by the present Government. We had a promise from the Labour Party in a statement in their pre-election literature that social welfare recipients must be guaranteed real increases in their incomes. If you were to ask me what a real increase would be I would say that the 25 per cent given by Fianna Fáil in January last to social welfare recipients was a real increase. I would not consider that the 3 per cent increase given in July means anything at all, and it is a very small figure if it sums up the total Coalition commitment. Those whose slogan was, "We need jobs, not promises" forgot about the promises they themselves made as soon as they got their jobs. It proves again that the most efficient muzzle ever designed for a Labour TD has proved to be the ministerial Mercedes. Members from Fine Gael are surprisingly mute also, apart from those who have not got the Mercedes, of course. Labour at one time looked upon themselves as the party of the workers. In 1969 they succeeded in having some intellectuals elected and they began to feel that they were all-embracing. Then Sinn Féin the Workers Party, who found it necessary to have that label "Workers Party" on their backs so that the people would know that they represented the workers, got their representative into the Dáil in 1981. I doubt if the workers involved whom they purport to represent will look upon them as their champions in the future when they look back at their performance.
During the budget speech the Minister made an announcement about substantial savings in different Departments. He mentioned that in the Department of Justice cutbacks were to be made. These cutbacks have not been identified, but a consensus of opinion among people in Ireland today would hardly pick out the Department of Justice as the obvious Department where cutbacks can be made. The request that I hear is for more gardaí, that we should reopen Garda barracks particularly in rural areas and small villages and that we should staff them at least at the same strength as formerly. One of the best cures for crime at the moment would be more gardaí on the beat, and gardaí living in an area would get to know their area. There has been a great outcry and a sense of outrage in the country at the increase in crime. In my area, within half an hour's drive of where I live, we have had four murders within the last fortnight. People feel that they are entitled to protection from the State and they want this protection, and the Garda who provide that need a certain amount of protection and support themselves. Any cutback in the Department of Justice is not the answer. The cutback can be effected only by loss of manpower or redeployment of manpower, and reduction in recruiting or necessary equipment.
As criminals become more sophisticated and avail themselves of modern technology, so also must the Garda if they are going to counteract the criminals. The suggestion that has emerged that capital punishment should be removed from people who kill gardaí shows great lack of concern and public awareness. I find it hard to understand that. In regard to members of the Cabinet, do they go home and mix with the people and know what the people of Ireland are saying? Are such members completely insulated and isolated? This lack of public awareness it seems is unsurpassed in any other public representatives. This is all part of a penalty that we pay when we have a party of professors rather than practical people. I have often heard it said that a genius was the worst possible person that one could have running a business. To have such people running the country is a disaster altogether.
Mention was made of a 3 per cent quota so that within the public service we would hope to recruit and find jobs and suitable positions for disabled people. This is a very laudable and necessary target to set, but I have no great evidence that this is being implemented. The only evidence I have of this in 1981 is confined strictly to words, promises and a certain amount of outward show. While I agree that it is difficult to implement, I ask the Minister for Finance and the Minister for Labour to ensure that this is pressed ahead and that the quota is reached in this year which we have designated as the International Year of the Disabled.
I will deal briefly with the employment of youth. This needs our special attention. I suppose that everything that one mentions is an item of priority but if we want to prove to young people that we have an interest in their welfare we have a duty to help them find jobs and provide jobs for them. It is a vital need. We have put a 1 per cent levy on all incomes which, in itself, would be acceptable to people if it was felt positively that this money would not be sucked into public finances. All the money should be used towards providing jobs for our young people.
The cutbacks have also been felt in the AnCO centre in Droichead Nua. When Black and Decker first came to Kildare town, an AnCO training centre was set up. Subsequently it was moved to Droichead Nua. We are very sorry to hear now it is proposed to move it to Ballyfermot. We feel it should remain in Kildare. All political parties have indicated this and the decision to set up a branch in the polaroid factory does not satisfy the needs of an industrial centre like Droichead Nua which has more young people than any comparable area of its size. If we are serious about allocating this 1 per cent to provide employment for young people we should not cut back on their training in any area. The training centre in Newbridge should be retained.
The Minister also said that savings would be made in education. Since 1977, civil servants in the Departments of Finance and Education have been making suggestions as to how money could be saved without realising the disastrous consequences that might follow from their actions. There was a suggestion in 1977 that we should increase the school entry age to national schools by six months. The new, young Minister for Education — possibly he should have stayed in the political school for longer before he ventured into this important position — swallowed this, hook, line and sinker. I think the Government now realise how wrong this decision was and they will probably hear more about it. Deputies have been shedding tears about the burden of debt which will be carried by future generations. They said it was because of Fianna Fáil policies but they are now shown up for the hypocrites they are when they decided not to allow children to come to school before they are four years and eight months and, if there is only one date for admitting children, they could be five years and eight months before they come to school. While the burden of debt that future generations might be forced to carry because of Fianna Fáil policies might be bearable, the burden of imposed ignorance and a denial of access to early education is intolerable. Many of these policies and changes have been imposed without any consultation. The Minister for Education announced what he was going to do, and did not consult parents, management boards or teachers. He said the decision had already been made and that they proposed to implement it.
It has also been decided that there should be no increase in the numbers employed in the public sector. In some cases there have been no replacements for people who have retired or left the service for one reason or another——
You have been discussing some matters which are not relevant to this debate. You must confine yourself to the taxation proposals.
I have already identified the lands branch of the Department of Defence as one of the areas affected.
On a point of order, that seems a joke to me. I have been here for the last few days and every matter in the country has been debated. Speakers have gone outside the terms of the Bill many times.
The Ceann Comhairle is at the mercy of people who write little notes and pass them to him. The Minister in his own brief said that there would be no replacement in some areas of the public service. That is wrong attitude because when you can identify areas of productive work, not alone should there be replacement, there should also be recruitment. It is up to individual Ministers to identify productive areas and expand them. Our State forests have potential as a fuel source and local co-operatives show potential in a small way. Small pilot schemes in rural areas could be used to deploy people who are on the dole, make them productive and restore to them a sense of purpose and dignity. A directive from a Minister that there should be no replacement or recruitment in the public sector should not be sacrosanct. There should be room for manoeuver as there was in the previous Government.
VAT charges have increased to 15 per cent. People are not so conscious of this at present but it will really bite in the months ahead. We have had an increase in stamp duties and the Minister announced a bank levy. He expected he would get an early Christmas box of £5 million by 1 December this year. Would the Minister let us know if this is on target? Does he feel that Santa Clause will arrive on time from the banks? It would be very interesting to know how that nice round figure of £5 million was arrived at. How was it to be divided among different banks? Will it be an annual target or is it just a once off rip-off, a chance of a lifetime? Was it some figure which was plucked out of the air? What is it tied to? Others pay tax on their profits or earnings, how was the figure from the bank arrived at?
The Minister also announced increases in postal, telephone and telex charges. When Deputy Reynolds was Minister for Posts and Telegraphs great strides were made in providing telephones. It may have been costly but, to me, the letters P and T during the administration of Deputy Reynolds stood for progress and tenacity. There is a great slackening off now. This has become obvious at all levels. There has been a cutback in overtime for P & T workers. There has been a great delay in equipment coming out of the stores. In Maynooth we have a very up-to-date, sophisticated exchange which was opened last May. In that large area of new housing estates people are still waiting for telephones to be connected because of lack of cabling. This is false economy. All the facilities are there. It only remains for the cables to be put in. There would be increased earning capacity in servicing new phone users and in time, if properly run, the service could pay its way. It is false economy not to link up the existing service with the people who require it.
In the Financial Statement, on 21 July, the first remark the Minister made was:
My main objective in framing this budget has been to ensure that Ireland remains an independent economy.
In any Coalition the parties are very conscious of Independents and the need to placate them. It would appear to me that Independents have played a great part in the framing of the policies enshrined in the budget and announced since the budget. There is a little story told with regard to Independent Members to the effect that the British Queen once said to Disraeli: "I am not quite sure about Independent Members. What are Independent Members?" Disraeli replied: "Independent Members are Members on whom no one can depend." The truth of that statement will be borne out in future.
In the second paragraph of the Minister's Financial Statement he said:
It is only from economic strength that Ireland can provide and protect jobs.
I would ask the Minister when replying to the debate to give one instance where his policies pursued in the last three months have provided or protected anyone's job in this country. The Minister said that reduced inflation is a sure basis for increased agricultural and industrial production. I would ask him to state when he proposes to reduce inflation or for how long his policies will have to be pursued before this desirable target will be achieved. I agree with the Minister that the twin problems he has to tackle are employment and inflation. The Minister mentioned that the joint programme of the Government has shown that these targets are interdependent. Minister John Kelly was right when he referred to the fact that Labour might contaminate Fine Gael. In my view the three Independents on whom the Coalition Government depend have emasculated the Government and items that we feel are not desirable have to be included to placate them and keep them sweet.
I should like to refer to instances where the Taoiseach and the Minister have lost no opportunity to belittle our economy and, indeed, to help to debase our standing in Europe. The Minister said with regard to our borrowing:
There are limits, however, to the extent that international banks are prepared to lend even to Governments and these limits can be reached suddenly and with little warning. If for some reason the availability of money on world markets were to contract or if large extra funds were required by other Governments the bankers would no longer be knocking at our doors offering this money.
That is an admission that before the Coalition came to power bankers were prepared to offer us money and to knock at our doors to offer money at pretty reasonable conditions and rates of interest. Statements like that, which have been read in Europe and, I suppose, believed by persons more gullible than those who are running the country, and which have been read within the EEC, have been made to blame Fianna Fáil for the state of the country and in order to bolster the weak case the Government have made for the measures they have introduced and which have proved hopeless and useless in solving our problems. Statements like that are acts of very unpatriotic people. We were told that the previous leader put Ireland first: "Cosgrave puts Ireland first". It would appear that the Taoiseach did not put Ireland first. He managed to put Cosgrave out but he definitely did not put Ireland first when he made statements like that.
We would like to know how long it will take to put our finances on a sound footing and what the national debt will be in three years time, if, God forbid, the Government last that long and manage to implement their policies and continue their bookkeeping exercises. When will the inflation rate be at 12 per cent or even 18 per cent? When is it expected to come below 20 per cent? These are questions we should ask. When will there be fewer than 100,000 unemployed? These are questions we might well ask the Minister to answer.
The Minister devoted considerable time to an incomes policy. He said that a new approach to central wage bargaining will be made. Does that mean that there will be a negotiated agreement or will there be a free for all? What we came to regard as an annual national understanding did give a sense of security; it did allow people to look ahead for one year and to be reasonably sure of the position in that year ahead. I would need a lot of persuading that this free for all will work. I am very conscious that groups with muscle will skim off the cream and that those with little clout will lose out in the negotiations that follow. It is because of that situation that the national understanding or pay talks were first introduced. The present breakdown does not represent shadow-boxing by the unions concerned. It is for real. I would appeal to the Minister and the Cabinet to exercise the great care and attention that this problem needs. I realise that there must be a certain rigidity in their approach but there should be a certain degree of flexibility also. All sections of the community, all the social partners, must be brought along. Agreement is needed. I do not say agreement at any price but at least people should be encouraged to continue to talk to one another. They will have to talk to one another eventually.
While I have been very critical I would like to make a suggestion as to how we might raise money rather painlessly, that is, by a State lottery. The Minister for Finance will possibly find some mention of this in the files of the Department. I believe that initially we could make £15 million a year profit on a State lottery. I have examined the State lottery that is run in Massachusetts. Bostonian-Irish people have very much the same mentality as Irish people. It has been proved that State lotteries in the bible belt in America are not a great success but that in States on the eastern seaboard they are successful. I have seen that lottery in operation and have met the officers concerned and have seen the sales outlets. I believe such a lottery could be set up here. It could incorporate an ailing Sweep that now needs a Shamrock Draw in an effort to stay in business. It will soon need the four leaf clover if it is to stay in business and to play the part it did play for our hospitals in years gone by. Lest it would be felt that it would displace existing lotteries or charitable organisations or sporting bodies such as exist in the Minister's constituency, which have built up a very good lottery or system of financing themselves, they could all be incorporated as agents for the new State lottery. I have no doubt that it would work. I know people who would be prepared to invest money and expertise in it. I offer this as a helpful suggestion. Such a lottery could be earmarked for youth programmes, employment programmes, educational programmes or even health programmes. It would get a very good response from Irish people, who are particularly prone to investing in lotteries and having a bet.
Three months have elapsed since the budget was introduced on 21 July. Therefore, unlike the instant reaction of some Deputies, we can now evaluate its impact on the country for good or ill. The budget was presented as a necessary evil, in atonement for the sins of Fianna Fáil. We were sent off like scapegoats to the Opposition benches, loaded with all the crimes which have been committed since the foundation of the State. Three months later it can be seen that the honeymoon is over — and I am not referring to the Minister's honeymoon in regard to which I wished him well. I mean the period when the media, and even the Opposition Members, are expected to give the new Government a chance to settle in. The long time without the Dáil being in session and without the necessity for answering parliamentary questions gave them an opportunity to get on with the job. However, I see no good emerging from this budget. The country is worse off. We are facing a bleaker and blacker winter than ever before and "bleaker" was a word used by the Deputy Leader. There is intense dissatisfaction everywhere with the Government, and they know it. That is one of the reasons for not having the Cavan-Monaghan by-election.
Perhaps, the medicine ordered by the doctor in July is slow acting. It may work on the theory that things must get worse before they get better. At this stage people are expecting some signs of the promised planned progress. I speak to people in all walks of life, mostly ordinary people like myself who are trying to make ends meet, sometimes business and sometimes wealthy people, people in the racing industry who are very disillusioned, sometimes farmers, in Kildare particularly, who were duped by Dukes. I can tell you that no-one is rooting for Bruton.
Firstly, do the speakers opposite who are criticising the Coalition for not doing this or that realise that we have been merely three or four months in office? Can we strike the rock and produce a miracle? Do these critics realise the state of the economy? Diagnoses differ, but the fact remains that the patient is sick, the patient in this case being the national economy, which I would describe as being at present in the intensive care unit. It will remain there for quite some while, to judge by the statistics.
It is well known that the national debt was £3,600 million in July 1977, when the Fianna Fáil Government took office. In January 1981, the national debt is £7,900 million, a vast increase in four years. The national debt per head of population in 1977 was £1,104 and after four years under Fianna Fáil Government £2,276. These are such startling figures that they had the effect, even on 30 June when we took office, of the national debt continuing to rise to the astronomical figure of £8,843 million. The national debt per head of population has risen to £2,580. The Opposition speakers blame the Coalition for the crisis, but who was Deputy Lyons trying to fool when he said that the Coalition were responsible for this situation because of their promises? Very few Coalition promises have cost the country a penny yet. We are not responsible for the sins of Fianna Fáil. We now have the responsibility of piloting the ship of State back to its correct course. This is a very difficult job.
Were it not for the introduction of the July supplementary budget, because of the course on which Fianna Fáil put the country it would have cost £740 million more to fund commitments provided for in the January budget. This is an alarming state of affairs. The details of the major net capital expenditure shortages which emerged at the beginning of July are as follows: for the Department of Social Welfare, £77 million; for the Department of Health, £47 million; for the Department of Justice, £16 million; for the Department of Defence, £11 million; for the Department of the Environment, £35 million; for the Department of Agriculture, £43 million; for the Department of Industry, Commerce and Tourism, £14 million; for the Department of Transport and Energy, £87 million; for the Department of Education, £10 million; and for the Department of Posts and Telegraphs, £19 million — a total deficit of £740 million which had to be provided if the country was to be kept going. If this money had not been provided, the result would have been as follows. Underprovision in the Department of Social Welfare Vote would have meant that unemployment benefits, old age and blind pension payments would have ceased on 1 September last because there would have been no money in the kitty to pay these. The money provided for the health services would have lasted only until 31 October and after that there would have been no more money to maintain our hospitals, pay our doctors or run the Department of Health. There would have been no money to pay the Garda after the beginning of November or the Permanent Defence Forces after 14 November, but for the supplementary budget.
Deputy Power said that Fianna Fáil, had they remained in office, would have provided more money for housing; but there was a shortage in the Department of the Environment of 33 per cent for housing grant requirements. In agriculture the extent of the previous Government's underprovision could have meant a shut-down of An Foras Talúntais, the discontinuation of the brucellosis and TB schemes and the ending of subsidies on milk and dairy produce, a halt in production and development aids to agriculture.
The shortfall of £14 million in the Department of Industry, Commerce and Tourism would have meant ending bread subsidies from August on and forcing the shutdown of An Córas Tráchtála and the Institute for Industrial Research and Standards before now. The underprovision for the Department of Transport would have meant CIE running out of money, forcing a close-down of public transport, trains and buses after last September were it not for the supplementary budget.
In the field of education the third level colleges could have been forced to close on 6 November for lack of money. Other effects could have meant that the staff in the Department of Posts and Telegraphs would not have been paid from 1 December. These are astonishing facts, but they bring home to us the seriousness of the state of our economy.
It is amazing to hear Deputy Power speaking about the Tuam sugar factory, but there was very little talk when the Fastnet Co-operative in my constituency was closed down because of a lack of a financial injection by the then Fianna Fáil Government. That meant a loss of 70 jobs in Skibbereen, and I know only too well what a loss of 70 jobs means in a small provincial town. When that co-operative made their recommendations to the Minister and the Government of the day, their request fell on deaf ears. Fastnet was strangled, doors were closed and the jobs were gone. This was the legacy Fianna Fáil left to the one and only viable industry in south west Cork.
I am amazed when I hear Fianna Fáil Deputies saying this or that should be done to keep Tuam open. Unlike Fastnet, Tuam was given a lifeline but south-west Cork got nothing. The railways were taken from us in the fifties. We were left without one mile of national primary road, even though we have over two thousand miles of road. I am very critical about the way the people in the south west are being treated. We are the forgotten people. We are treated as the Cinderellas of the country by successive Governments. The finest bay in western Europe, or even in the whole world, Bantry Bay, is lying idle without a ship or boat coming in. There is no need to dredge Bantry Bay to take big ships and liners because at one time the British Government boasted that Bantry Bay could hold her entire fleet. Today there is no activity there simply because of ineffective planning by successive Governments which have ruled for the past 40 or 50 years.
Industries were channelled into Dublin — at a rate which outpaced every other part of the country — and into Cork and Limerick. To successive Governments only three centres mattered, Dublin, Cork and Limerick with the Shannon basin. The rest of the people were left in the lurch. The rest of the country is not getting a fair share of the cake. We are completely forgotten, yet we have natural God-given amenities which are not availed of by the Governments of the day. However, we hope this situation will be rectified under this Coalition Government.
It was interesting to hear Deputy Power saying there was no replacement in the public services. What is Fianna Fáil's record? I have been a member of the Cork County Council since 1967 and for the past four years the labour force in that council has been drastically reduced because of a lack of funds. Not one man was taken on, even to replace people who had been laid off, because the money was not there. In 1977 I heard the then Minister for the Environment saying that if work could not be found for the labour force of the county councils he would dig holes in the roads and fill them up again. What happened? There was no need to dig holes in the roads; they are there and are getting bigger, but no extra staff was taken on even to replace men who had been let go.
This calls for immediate action. We must not run away from this problem; we must tackle it. Who asked for a general election last June when there was still 18 months to go, and the Government had a majority of 20? Why did Fianna Fáil bail out in mid-stream if everything in the garden was rosy? The general public know only too well that the then Taoiseach saw crises looming on the horizon and knew he had no hope of recovery under Fianna Fáil policies. Does anybody believe the Fianna Fáil Party could get a bigger majority than 20?
The Coalition parties have the courage to tackle these problems and the electorate gave us the mandate last June to take on the heavy burden of running this country. That is what we intend to do with, we hope, the co-operation of Fianna Fáil.
I would like to talk about rural Ireland. Why do we not see more decentralisation of Government Departments? Would not Bantry town be an ideal location for the Department of Defence? Why is every Department centred in Dublin? Soon half the population will live and work in and around Dublin. If the Department of Defence were in Bantry town it would have an invigorating impact on the life of that area, which has suffered so much in the past few years because of lack of jobs, emigration and so on.
More money should be allocated to build up our fishing industry. Outside agriculture, fisheries are our next most important industry, and rightly so. Fishing has been treated as a Cinderella industry. Our fishermen are second to none and should be equipped with bigger and better boats with a more sophisticated type of refrigeration. We should safeguard our fisheries by advocating a decent fishery limit in the European Parliament. For years there have been serious incursions by foreign trawlers around our coasts.
There must be a major assessment of our mineral resources. For too long our approach to this matter has been dilatory. I believe there are abundant minerals here which have not been tapped. There is a barytes industry in Clonakilty which exports material to be smelted in Wales. An unlimited supply is available in this area and the possibility of processing it in the area should be investigated. Around the turn of the century there was a huge copper mining industry throughout the peninsular areas and I have no doubt that there are still huge deposits of copper in certain areas of the west and south west which could be developed with the right technology.
Farmers are experiencing great difficulties at present and the enlargement of areas designated as disadvantaged or handicapped is necessary if farmers are to survive in the west. Last year our farmers paid £20 million in co-responsibility levies to the EEC and this is too great a burden on the agricultural community. The amount of dairy production here is only a small proporation of that in the EEC as a whole. Since we are not an industrialised nation a major effort should be made to secure immunity from co-responsibility levies for our farmers. They are the backbone of our economy. We must put the case in Europe, as I am sure our Ministers and the Commissioner will, that the Irish farmer must have a fair chance to make a living. A young farmer may have borrowed to the hilt to improve his farm and he may now be experiencing severe difficulties. It is vital that every help be given to enable him to keep going.
I smiled to see Deputy Power shedding crocodile tears about inflation. What caused this inflation? It was indiscriminate borrowing which plunged the country into a financial mess. He referred to car tax but everyone knows that it was not actually abolished by the previous Government — they simply substituted a registration tax. There was no money available from the Department of the Environment towards improving our roads and this was the only country in the world which claimed to have abolished car tax, although the reality was somewhat different.
Deputy Power referred to our policy of paying £9.60 to the married woman and there is no fear that we will backtrack on any of our promises. I was amazed to hear his claim that the former Minister for Posts and Telegraphs was such a success in his Department. When he was appointed to that position he said that within eighteen months not only would all applicants have a telephone but they would have two telephones. The result has been a backlog of countless applications and no hope of providing service for three or four years. Was this efficient running of a Department?
By what date did he claim this would be possible?
Eighteen months after taking office.
By 1984 or 1985.
There is now a backlog of applications which will take three or four years to clear.
The Chair is exercising a certain forbearance towards Deputy Sheehan in his maiden speech and would ask Deputy Briscoe to do the same.
I did not realise it was his maiden speech and I apologise for interrupting the Deputy.
The state of the country is far from healthy and this is the legacy we inherited. We are ensuring that the ship of State will be piloted safely.
The former Minister for Fisheries and Forestry told us that the afforestation had made great ground under his command. Does he know that the thinnings from our State forests in the past few years were exported f.o.b. from Cork and Dublin to Sweden and elsewhere at £1 per ton? Is that an economic price for the product of our State forests?
I will return to housing grants. In the January budget this year there was a cut of 33 per cent in the amount allocated for new house grants and for payments outstanding or reconstruction grants. We were in office only a few weeks when £30 million was provided for housing, and the Minister for the Environment introduced a scheme of reconstruction grants three weeks ago which the previous Government had suspended three years before. That is what I call progress. Perhaps a few items were not covered in that grant scheme but things will be improved as our financial resources improve.
More emphasis should be placed on increasing agricultural grants. The present grants payable for farm reconstruction and re-organisation are completely inadequate. Present costings are based on figures for four years ago. It is time to revise these costings in line with inflation in material prices and I ask the Minister for Agriculture to bear that in mind because it is of vital importance if our farmers are to survive.
In October last year I listened to the former Minister for Agriculture, Deputy MacSharry, addressing a TV press conference on his return from Europe. He spoke about the good deal he had achieved for Irish sheep farmers. He said he had brought back a subsidy of £9 per head for sheep. Soon afterwards in the Donegal by-election campaign he trotted out the same story about the £9 per head subsidy for sheep farmers which he had brought back from Brussels, and I heard several Donegal sheep farmers expressing delight at the extra £9 per head for their sheep. Some of them estimated they would get an extra £4,500 each. That kind of tactic won Fianna Fáil the by-election but instead of £9 per head extra the Donegal sheep farmers have got only 98p. The Minister for Agriculture has told us that this week he is putting a proposal before the EEC which will give £10 per head to our sheep farmers.
We must begin at the beginning. We cannot suddenly produce here a land flowing with milk and honey. We must cut out the cancer that exists in our economy. First of all we must right our trade imbalances, and to do this we must try to ensure that our industrial, agricultural and fisheries production as well as tourism will become competitive. I come from an area which is classed as the Riviera of Ireland but I am appalled at the lack of Government money for infrastructural improvement in the area. We have not been given a fair share of the cake. Bord Fáilte must make a vast improvement in their activities in southwest Cork. For a start, a decent road network must be provided for the area. At the moment the only national primary road is that running from Killarney and on to Dublin. Because of this lack of infrastructure tourists leave this country without having seen some of the finest scenery in the world.
It is no good building luxury hotels in Dublin and in other growth centres and at the same time ignoring the God-given resources we have to offer to foreign tourists. I suggest that for three months each year we provide a ferry service from Bantry to Rotterdam and Le Havre. All these facilities should not be limited to the east coast and Rosslare. I suggest, for instance, a ferry service up the Lee. I suggest also that the tourist organisations should consider these matters so that we will not have tourists coming into Rosslare and driving through flat countryside into Cork city, having to travel almost 300 miles to get to the area which is most appealing to Europeans. Surely the powers that be should realise that no matter where one goes on the Continent, in Spain, the Canary Islands or on the Mediterranean one's hotel is within 20 minutes drive of the airport and very close to a beach. It is all right for people to say that we are not going to get such tourists but we will get them if we provide the services they require.
Many Europeans I met asked me if the Government, and the Department responsible for tourism, were turning a blind eye to the goose that was laying the golden egg because of the lack of facilities. In our area we deserve more recognition as far as tourism is concerned. We deserve recognition which will let us play our part in helping to do something for the economy. However, we are seriously impeded because we have roads which can only be described as Burma strips. We should have decent roads for our tourists and our own people in an area that suffers so much.
More industries will have to be channelled into rural Ireland. I am not asking for large concerns but small viable industries suitable for our provincial towns and villages. We must ensure that our rural population is kept going. If we are going to close the doors on homes in the south-west of Ireland we are depriving the country for ever more of a culture, a race and a tradition of people who helped to build up this State. Those people played their part under difficult conditions in building up the State. I appeal to the Government to bear in mind that no matter what it costs to provide a service in rural Ireland they are providing a social need. It is well known that unless we nurse those areas, unless we bring industrialisation and prosperity back to them, we will not have a viable community.
I appeal to Fianna Fáil to cut out the mickey-mouse politics they have engaged in since I was elected to this House in June. I appeal to them to act as a responsible Opposition, to co-operate with the Coalition Government who have had the courage of their convictions to tackle the serious problems confronting the country. I have no doubt that if we get that co-operation and a sensible approach from the Opposition we will correct the serious list that has occurred in the ship of State. It is well known that we took over a ship of State that was listing heavily. We will correct that ship of State and pilot it into a safe dock so that the country can emerge as a progressive nation amongst other European countries to play our part in the survival of civilisation in western Europe. Were it not for the serious measures taken by Deputy Bruton in his first supplementary budget as Minister for Finance, were it not for his courage and tenacity in bringing about measures which may prove unpopular but which were desirable, we would not be proceeding on the road to recovery. I ask Fianna Fáil to give us a chance to carry on the job we have the mandate to do. The road may be rough and the journey may be long but it is not a hopeless case. I can guarantee everybody that under the leadership of Deputy FitzGerald as Taoiseach, a man who has the spirit, courage and determination to bring the country back on the road to prosperity, they do not have anything to worry about. Unpopular measures will have to be taken. If the people who died for the freedom of the country in 1916 came back and saw the legacy we were handed over in June, a national debt of £8,843 million, they would ask themselves if their sacrifice was worth it.
I do not intend to speak at length on this Bill but there are a number of things which should be reiterated. One of these matters, the £9.60 which the Government say they will give to wives, was spoken about rather indignantly by Deputy Fennell yesterday. I have met a lot of the wives who were under the impression that they would qualify for this £9.60 and I had to break the news gently to them that unless their husbands were paying a substantial amount of tax they would not qualify. Those people will find out soon enough the con trick that was played on them and they will not forget it. If the Government go ahead and implement that election promise which all the pundits on the economic front have advised against in view of its high cost, I have no doubt that there will be considerable anger. I have never claimed to be very hot on the subject of economics but I can understand that a political party which states during an election campaign that the country is in a bad way financially due to profligate spending by the outgoing Government, predicts huge deficits by the end of the year and the phasing out of that deficit over a number of years while at the same time promises so much, is wrong, because there is no way the country can afford such schemes. We are talking about a figure of between £400 and £500 million. That amount will be needed to implement the £9.60 allowance and the other aspects of this peculiar package which has been put together by the Government.
The interesting thing about this package is the reduction of the income tax fund from 35 per cent to 25 per cent and whilst this money goes on to indirect taxation how will it affect people who are outside the tax net? There are other people who are within the tax net but they are at the lower end of the scale. What happens to those people when the extra cost goes on to all the items which will be required to be taxed to pay for this? Is VAT going to be increased again? If so, how is it going to affect employment? Purchasing power is going to dwindle. Already people are spending less. During the election campaign the enormous cost of implementing this package was spelled out to the people but it was not accepted at the time. The Coalition replied to us by describing what we said as lies nailing the lies. We have already seen a few of those counter-statements by the Coalition and by Fine Gael in particular. They have been shown to be untrue. I should not use the word Coalition because Labour were against this package and, as far as we can see, are still very much against it.
Coalition Governments are very astute when it comes to press relations but they have always ignored the feeling of the men or women in the street who know the way these changes are affecting them and their families. These changes are felt not only by the woman who goes out to do the shopping for the family but by the woman who goes to work as well and who is, perhaps, buying a house. There are many people buying houses who have found that it has become almost impossible to make ends meet. In Celbridge where I live there are a lot of new houses which cost in excess of £20,000, £25,000 and £30,000 being bought by young married couples who are working and repaying mortgages at the rate of £210 and £220 a month. These mortgages have gone up to £270 and £280 a month and these people are in a complete bind. The shopkeepers in a small town are always the first to know when the economy is not going well. They are the ones who can tell one about the problems of the people who are living there because people tend to talk to the shopkeeper when buying groceries or waiting to be served and this is a very good way of getting a playback from the people.
One item that I have been worried about since the introduction of the budget last July is the plight of old people this winter because of the cost of fuel. Not everybody is in receipt of the free fuel allowance. I asked the Taoiseach in July to keep a very careful eye on what was going to happen to those people when it came to heating themselves. We all know what our electricity bill is like, what our gas bill is like. We know that it is a tremendous strain to find the money to pay our fuel bills. For those people it is going to be impossible. I am anxious that this situation would be monitored. But I have seen no effort by the Government to do this. It is now November and if we have a cold December, January or February we are going to have a real crisis on our hands. We can have all the Ministers for Poverty we like but it is our job to find out what is going to happen to that section. We are into the winter now and we should be making plans. But I am not satisfied that this Government have made plans. I think that by the time next March or April comes along we will have heard a few sad stories about people being found dead in their homes from excessive cold. I am not saying this as a political ploy. I am pleading with the Government to watch the situation in relation to food and fuel. I do not see anybody going hungry, thank God, but I do see people suffering from the cold and I am anxious about that.
Warnings have been given about what is going to happen to this economy over the next six to 12 months if this January budget is introduced. If the packages are not implemented it will be good that the Government have seen sense and, because of the pressures from elsewhere, have realised that this is not the time to do it. The feeling is that if the Government implement these packages it is going to burst this nation and we are just not going to be able to take it. The Coalition Government, and the Taoiseach in particular, always seem to come across as compassionate and caring; yet when we pointed out that in this budget in January VAT on aids for the disabled was increased and asked for them to be deleted from the Finance Bill, it was not done and apparently it will not be done. This speaks for itself. By their deeds ye shall know them.
There are increases in the cost of petrol. The price of it has been spiralling. The oil companies apply to the Department for an increase because of the rising dollar. We are helpless to do anything about it and we accept it. We are talking about £3 a gallon and there is a feeling of not being able to do anything about it. It might be interesting to note that in answer to a question I put down yesterday to the Minister for Finance in relation to the total tax and excise on a gallon of premium grade petrol on 1 July of this year and the total tax and excise on a gallon of premium grade petrol on 20 October of this year, the answer I got was that in July it was 92.4p and in October it had risen to 108.2p. That is an increase of 16p per gallon in tax alone. Every time the gallon of petrol is increased the Government must be very happy because it is extra revenue for them. They know that people will not stop using their cars, particularly if they need them to get to work or because there is not a bus service to take them to work. Those people find it very hard to maintain their standard of living.
The Government should by now have frozen the level of tax on a gallon of petrol. I use the Jet premium grade petrol which is 5p a gallon cheaper than the other suppliers. I have worked out that 108.2p a gallon, nearly 50 per cent of the price of a gallon of petrol, is excise duty and VAT combined. We must try to reduce the cost of motoring. I remember some years ago saying to Deputy Colley, when he was our spokesman on Finance during the period of the last Coalition Government, when motoring costs soared, that the way to deal inflation a body blow was to reduce the cost of transport because almost everything we eat and everything we wear is transported. Travellers who go around the country selling their products for their firms use their cars. Almost every single thing that society consumes is carried by road. I believe when the Government increase the cost of transporting goods they are adding further to the inflationary spiral.
The Government made a very bad mistake in reintroducing road tax for motor vehicles. When road tax was abolished it was a contribution towards keeping the cost of motoring down. I do not believe every party are as fortunate as we have been in getting a second bite at the cherry and I do not know if our party have yet adopted a policy of saying that if we are returned to Government next time we will abolish road tax. I would certainly be anxious for them to do that because I believe that by reducing the cost of transport one is dealing a body blow to inflation.
In the January budget we allocated £10 million for youth and community activities, halls and community centres. Fianna Fáil have had this commitment for a considerable time. I do not believe there is anybody in the House who doubts my interest in this area. I am sickened to read of the large payments being made for community halls and the new Government taking the credit as if they had decided to put up this money. This money was budgeted for by the Fianna Fáil Government.
There is another example of this kind of stealing of clothes only yesterday when the Minister for Transport, Deputy Cooney, announced the building of 24 railway carriages at Inchicore. Last February I circulated 700 copies of a speech made by the previous Minister, Deputy Albert Reynolds, to all the employees in Inchicore showing that it was a commitment by Fianna Fáil that we would build those coaches at Inchicore. I did that because the new Minister for Justice, Deputy Jim Mitchell, in this House and at the Inchicore works was undermining the workers' morale by giving the impression that Fianna Fáil would not build those coaches, that Fianna Fáil would close down Inchicore.
Deputy Mitchell raised the question of Inchicore in an adjournment debate with the Minister, who in his reply stated quite clearly that nothing was further from the Government's mind, that we were going ahead with the building of those coaches and that everything was laid on. I circulated the Minister's reply to the workers in Inchicore. Having read the papers and listened to the Minister on the 1.30 News yesterday, despite what people may think about this sudden injection of capital into Inchicore, the workers there will not be taken in by this. They know that this was already catered for by the previous Fianna Fáil Government. This is another example of where a commitment entered into by Fianna Fáil is being taken over by the Coalition Government and the impression given that it is entirely on their initiative.
Fianna Fáil envisaged a massive programme of expenditure to modernise our telecommunications system. Everybody knows the growth which has been stultified, the jobs which have been lost because of our telephone system. We fear that the massive infrastructure development we were embarking on will be held back by the Coalition Government. This is the time to build up that infrastructure when there is a world recession and when there are not as many companies coming here to start industries as we would like. We must be ready for the time when the recession is over and industries can come in here and set up here without having any telecommunications problems. One of the worst problems about setting up an industry here has been our telecommunications system. I am sorry I interrupted Deputy Sheehan, because I did not realise he was making his maiden speech, but I had to interrupt him when he spoke about promising people telephones on call, because this was our policy. We wanted to ensure that by 1984 people could get a telephone on demand, and two if necessary. One only has to read about how the telecommunications system works in the USA to realise how efficient their system is in comparison with ours and the speed with which they can get telephones installed. Yet even they complain about their service sometimes.
The increase in VAT has done a lot of damage to the motor trade, although not in the short-term, because I am sure everybody knows that from the introduction of the budget to the beginning of September the sale of cars zoomed. If the Government were intent on trying to reduce the balance of payments deficit they went about it the wrong way because I believe more cars were bought in that period than would have been purchased if this very substantial increase were not to take place. One of the unfortunate spin-offs from this action has been that, now that those cars have been sold, there will be a very considerable slump in the motor trade. I understand that already quite a number of people are being laid off in the various showrooms and businesses which distribute motor cars. This is most unfortunate.
We have heard pious statements about the freezing of employment in the public sector. The Minister gave very many reasons why we should freeze such employment. I am delighted the press have not ignored the fact that people known to be supporters, friends and relations of the Fine Gael Party in particular have been given jobs in the public service at very substantial salaries. The appointment of the former Senator Alexis FitzGerald as an adviser to the Government at £30,000 a year is an example of the kind of discrimination which exists.
Between the time when the former Coalition Government left office and the Fianna Fáil Government came back into office, 300 appointments were made in the civil service. At the time the civil service unions came very close to lodging substantial complaints. I wonder how long the civil service unions will stand by and watch this happen. In spite of promises that many of these people have signed letters to the effect that they will resign from their jobs if there is a change of Government, I do not accept that they will. Many of them will opt to stay on. I do not believe the Government.
No one has said it is easy to govern. It is not easy to govern. It is very difficult, but this Government are making no attempt to govern. The fact that the national wage agreement now appears to have gone out through the window, the fact that there will be anarchy in wage settlements with the strongest succeeding and the weakest going to the wall, is the fault of the Government who have shown no interest in pursuing a wage agreement vigorously.
I should like to refer back to 1978-79 when Fianna Fáil created more jobs than were created in any year in the history of the State, and to compare that with the record of the former Coalition Government and the present Coalition Government. I predict that, by the end of their term of office, their record will be as abysmal as that of the former Coalition Government in the creation of new jobs. References are made frequently to the kind of statements emanating from the Taoiseach about our finances. Firms contemplating setting up an industry here must have drawn back and waited to see what would happen. Who knows what changes may have occurred in their own countries in the meantime to discourage them completely from setting up an industry here. I should not be at all surprised if many cancellations resulted. I will be putting down a question asking the Minister how many projected industries were before the IDA at a particular time and how many were withdrawn subsequently.
A great deal of attention has been directed towards the Independents in this House. People wonder will they or will they not support the Government. What will Deputy Sherlock do? What will Deputy Kemmy do? When the break in this Coalition Government comes, it will not come as a result of any action by the Independents. Once they pledge their support, they are locked in. The break will come from within the Fine Gael Party and certain elements in the Labour Party, very few of whom are not Ministers. It will come as soon as they begin to get the message from the electorate that they are not very pleased with the Government. The pressures will build up. At that stage the Taoiseach will find he has more than the Independents to contend with. Those predictions are now on the record of the House and we shall see.
I should like to make a comment on the Government's attempt to freeze jobs. Most people are aware of the attitude of the INTO to the Government's latest attack on education. During the election campaign I made a certain number of speeches in which I said the first Department to suffer under a Coalition Government was always the Department of Education. Because of the seeming interest which the Taoiseach always expressed in education — he never missed an opportunity to go to a university or any educational institution to address young people — I was half willing to believe this Coalition Government might be an exception but I was wrong. We have the example of the Coalition Government cutting back on education by £5 million. In an interview on the radio when the scheme was announced, the Minister for Education was asked by the interviewer how much money would be saved by raising the school-going age from four years to 4½ years and he said he had not worked it out. I do not think anyone believed him. Saving money was the primary reason for the scheme and not the interests of the young children involved.
In poorer areas in my constituency many parents had bought uniforms for their children and had paid as much as £50 for those uniforms. Then it was announced that their children would not be eligible to go to school. There was no way in which they could get a refund on those school uniforms. Naturally the shopkeeper would not take them back. Who would he sell them to? This is one of the spin-offs of the announcements we get from the Government, sudden announcements with no warning. Many parents in the less well off categories found themselves in that position in other parts of the city. Parents in the better off categories also bought uniforms for their children and then found their children were not eligible. That was money completely down the drain and typical of the kind of action taken by this Government.
Not that long ago, prior to Christmas, we had an increase of 15 pence on a gallon of petrol. I am wondering what Christmas present will be announced this year. I wonder if we will hear that television licences are to be increased to £75 or something like that. We know these things are coming. That is the situation and we must just go along with it.
I am not one of those people who would predict an early election. I think we will be stuck with this Government for three years at least unless something very untoward happens. Certainly we will be trying to precipitate an election, to get the Government out and beat them with as many votes as we can. However, I do predict that at the next election there will be a bigger rejection of this Government than ever before. That does not necessarily mean that we will win by 20 seats, the majority about which the previous speaker spoke. The previous Coalition simply gerrymendered the constituencies to give themselves a very substantial win but it went very wrong for them and they had their fingers very badly burned. The next time I hope they will do as Fianna Fáil did, that is leave it in the hands of an independent commission if there is to be any change effected in constituencies. If they think it will benefit them no doubt they will effect some change in the constituencies. However, I think they have learned enough to know that one can gerrymander constituencies but not the electorate. That is why I predict a very large swing against the present Coalition, larger perhaps than that experienced by the previous Coalition.
Indeed, the former Taoiseach, ex-Deputy Cosgrave, knew what he was doing when he did not appoint the then Deputy Garrett FitzGerald to the Finance portfolio. He knew that the present Taoiseach — and I do not want to be misrepresented in making this remark — would be what might be described at a tinkerer with the finances. I think he is a person who will tinker around with the finances of this country, that he will take one course, will change direction if he feels that is not the right course and will only exacerbate the situation as it progresses. I do not believe the Taoiseach knows what he is doing. He is very good at talking about a given subject and can blind a lot of people with science but falls short when it comes to making the right decision. I do not think he will do so. I have always said he is not a decision maker. He is very good at coming up with alternative solutions to problems but never succeeds in taking the right decision. More often than not he will not take the right decision. Unfortunately and sadly that will be to the country's detriment.
The Taoiseach is certainly drawing his fair share of plaudits from the Opposition benches this morning. Deputy Power referred to him earlier as a genius — admittedly he said he should not be in charge of the economy — and now Deputy Briscoe has paid him further tribute. I do not think their remarks were meant to be flattering but they are to the extent that they consider him worthy of so much of their attention.
I should have thought that if the Bill we are debating was of such concern to the Opposition they would have had endless speakers contributing to the debate. I believe they have considerable difficulty in getting speakers because it is unusual for a Whip to have to come in and man the barricades while awaiting somebody to line up Deputies to speak. On this side of the House we have a long list of speakers still to come and the number of maiden speeches made from the Government benches is an indication of the quality of back bench Deputies elected in 1981 of both parties forming the Coalition. Bearing in mind that kind of opposition to Fianna Fáil their chances of getting back into Government at any future election do not appear so bright.
There is nothing like the zeal of a convert, as was displayed here this morning by Deputy Briscoe when he spoke about the gerrymendering of constituencies by the last Coalition Government. This is a completely new stance from a Fianna Fáil point of view. The only revision of constituencies carried out between 1932 and 1973 was done by a non-Fianna Fáil Government, a revision which Deputy Briscoe now contends amounted to a gerrymandering of the constituencies. However, despite their huge majority in 1977, they lost the 1981 election. The only occasions on which constituency boundaries were redrawn were during the term of office of the last Coalition and then more recently by the Independent Commission appointed by the last Government. It might be an interesting study for some enthusiastic student, for a thesis degree, to ascertain whether Fianna Fáil were kept in power from 1932, with two short breaks, up to 1973 because they redrew constituency boundaries.
When we assumed office earlier this year we had immediately to set about rectifying the financial position in which we found the country. The first thing we found it necessary to do was to introduce a supplementary budget in July last. Indeed, I believe that had Fianna Fáil been returned they would have had to take similar action. The Bill we are now debating gives statutory effect to the taxation changes announced in that July budget. Of course, taxation measures are never popular. As politicians we would like to be able to approve of expenditure proposals without, at the same time facing up to our responsibilities by providing for the necessary taxation income in order to finance those expenditure proposals. That is a fairly understandable human reaction but Governments are elected to govern and we have not that luxury available to us. To do that, however, would be irresponsible and such a policy would give rise only to serious problems in the medium term. Unfortunately we are now paying the price of such irresponsibility on the part of the Opposition when they were in government. The problems facing our economy, the very high levels of unemployment, balance of payments deficits, current budget deficits, inflation and unit labour costs are not new to us — they have been with us for quite some time — but regrettably action to solve them is being taken only now. The publication of the NESC report earlier this week underlines what I am saying as being absolutely correct and is shared by a body of opinion not influenced by any member of this Government, or indeed by any Government.
Short-term popularity is always a tempting possibility. Current expenditure can be financed in the short term either from borrowing or by a new means discovered by the Opposition under which payments irrevocably committed and falling due are ignored — they are simply not provided for in the departmental Estimates — thereby presenting an overall picture at budget time which is grossly misleading. Such action is possible only at the expense of future living standards having to be reduced.
I welcome the proposals in the Bill. In so far as my Department are concerned they have enabled me to make up for the exceptionally high under-financing for the current year by the Opposition for the services for which I am responsible. In coming weeks I shall be moving a Supplementary Estimate in the order of £30 million. The major portion of this arises from under-provision for essential payments to local authorities by way of subsidies on local authority housing, subsidies on water and sewerage schemes, rate grants and so on. Deputy Power who spoke earlier this morning was eloquent in his support for local authority housing schemes throughout the country. He was equally eloquent in his condemnation of the Government for not providing finance for local authority housing. The truth is Deputy Power was a member of the Government who prepared the Book of Estimates and the budget this year.
All of the budgets introduced by the former Government reduced in real terms the amount of money available for local authority housing and it is the cumulative effect of the budgets during the past four years that is endangering the jobs of those in industry and that is also the cause of the lengthening queues of people for local authority housing. If I had not taken action last July in providing an extra £30 million there would be at least 3,000 or 4,000 people laid off between the end of what is called the "builders' fortnight" and the end of the financial year. As it is, it appears that completions of local authority houses this year will be the lowest for 15 years and that is directly due to the shortage of finance that occurred in 1979 and 1980. We are suffering the effects of that now. The benefit of the extra money I provided in July last will not be apparent until next year but at least it has meant that schemes will be finished this year that otherwise would not have been completed. If I had not provided the money the number of completions of local authority houses would probably have dropped below 5,000 and that is a figure any Government should be ashamed to acknowledge.
Deputy Power wept crocodile tears this morning about the state of local authority housing but he was at the Cabinet table when it was decided as a deliberate policy to run down local authority housing. In successive years the Fianna Fáil Government did not provide enough money to keep the programme even at its unsatisfactory level. Even when the number of completions is over 6,000 a year it is not satisfactory but I hope to get it back to that level in the next few years.
A tactic used by the Opposition for a number of years when they were in Government was to resort to deficit financing for current expenditure. Current expenditure was financed from borrowing and an increasing proportion of this borrowing came from outside the country. This borrowing committed taxpayers to the necessary payments in the future in order to meet the repayments on the loans. The use of borrowing over a number of years to finance current consumption inevitably leads to the necessity in the future to raise taxation and lower consumption in order to meet the repayments on such borrowing. The National Economic and Social Council report just published estimates the total transfer of resources abroad in 1981 in order to meet repayments on official external debt at £540 million or about £460 per employed person. That means that every employed person is giving approximately £9 per week out of his salary to meet the repayments on money borrowed from abroad. That is an unacceptable burden and firm action must be taken to undo the damage.
For 1979 and 1980 foreign borrowing contributed about one-quarter of the total funds available for investment and one-fifth of this was used to finance day-to-day expenditure with a further share being used to finance unremunerative investment. Page 2 of the NESC Report No. 62 made the following criticism of the former Government:
An aspect of the fiscal policies during 1979 and 1980 has been the increasing scale of error in budgetary forecasts. Estimates in the budget statements of 1979 and 1980 suggested that the Exchequer borrowing requirement would amount to 10.5 per cent in both years, while the actual outturns were 14 per cent and 14.6 per cent of GNP, respectively. The actual current deficit in 1979 was 80 per cent greater than forecast in the 1979 Budget, while the 1980 outturn was 50 per cent greater than the forecast in the 1980 Budget.
Can any Deputy on the opposite benches wonder why his party are now in opposition? I do not think any Fianna Fáil Deputy can be in any doubt that one of the major reasons for their downfall was the general feeling of unease throughout the country, the feeling people had that the Government were making a mess of running the country. People were conscious of the irresponsible attitude of the former Government with regard to the finances. It was the job of this Government to take the necessary measures to bring those finances under control and proof of the correctness of our action was the report published during the week. It was not a document produced by the Government. The group who published the report was chaired by Dr. Noel Whelan, a person who was and is still in the Taoiseach's Department and the members nominated by the Government are economists and high-ranking civil servants. The CII and the ICTU nominated members as did co-operative organisations, the Irish Creamery Milk Suppliers' Association, the farming associations and employers' associations. The report was the most chilling indictment of the performance of any Government.
It was obvious that such foreign borrowing could be financed only at the expense of a reduction in future living standards. These policies cannot and will not be continued. As the NESC report emphasised, continuation of the policies of the Opposition when they were in Government would have meant that the current budget deficit would have risen to £1,405 million in 1984 when service of the public debt would take 99p out of every £1 receipts from income tax. I do not think those figures need elaboration by me. They are quite appalling in their implications of the future of the country. Even if Fianna Fáil had been re-elected, they would have been forced to take urgent action to deal with the problems they had created.
A major factor in our unacceptably high unemployment rate was the misuse of capital moneys in the past. These funds should have been used to stimulate employment and growth rather than dissipating them on current expenditure to meet day-to-day expenses. An overriding consideration now must be to restore order to our national finances. We cannot continue to finance current expenditure from borrowing. To the extent that current expenditures are necessary they must be financed from the proceeds of appropriate taxation. To most people these are self-evident truths but they were lost sight of by the former Government during their four years in office, and particularly during their last 18 months in office.
Of those who would criticise the proposals now before us I would ask, what are your proposals either by way of alternative sources of taxation which you recommend or by way of suggestions for reducing expenditure? Are you prepared, for example, to say that local authorities should not be paid the amounts to them by way of subsidies and so on? There is not any point in coming in here speaker after speaker, complaining about what is being done, suggesting what should be done, if you accept the basic thesis, which I believe the party opposite do now, that the finances have to be taken into control and that by a combination of expenditure reductions and taxation increases that is, unfortunately, the road ahead for us from the day we came into office. If you accept that, you must either stop criticising what we are doing or suggest alternative cuts or alternative taxation. You cannot have it both ways.
Does anybody believe that the extra £30 million I found necessary when assuming office to allocate to local authority housing was not necessary? I have explained fully the effects non-allocation of that money would have had on employment and local authority housing not alone this year but the next year and the year after as well. The measures we have initiated in the July budget and which have been given effect to in the Bill now before us are not popular ones, for the simple reason that there is no easy solution to the very serious problems that confront us. We propose to continue to take such measures as are necessary to restore order to the national finances. Our approach will continue to be the positive one of facing up to current problems and making every effort possible to undo the damage which had been done over a number of years.
The three Opposition Deputies I heard speaking this morning all referred to the fact that the honeymoon is over and that we should stop blaming Fianna Fáil for the mess in the economy, that three months' blame was enough for them. The effects of the last four years of Fianna Fáil Government will be seen for many years to come and we will not be finished referring to them after three months or after three years because we will still be feeling the effects that four years of Fianna Fáil Government have had on the economy. We will not be deflected from this intention of ours by any consideration of short-term gain. The overriding consideration must be to redress the very serious imbalance in the national finances and thereby seek to ensure that there is a future for all our people.
In framing the July budget there was absolutely no alternative but to raise significant additional revenue by way of taxation to finance payments falling due but not budgeted for. In examining proposals, possible sources, it seemed appropriate and indeed logical that road tax on cars not exceeding 16 horse power should be reintroduced. Deputy Briscoe referred to this a minute ago. The abolition in 1977 of road tax on cars under 16 horse power severely curtailed what had been a very substantial source of revenue to the State and for which an efficient means of collection existed. This was an expedient which could never hope to survive. The fact that the previous Government quadrupled the annual registration fee of £5, which was intended to cover administrative expenses, to £20 was an indication that even then they had begun to realise that this loss of tax revenue could not be sustained. If they had remained in office and introduced another budget of course they would have doubled that £20 to £40 but it would not have been road tax being brought in; it would have been the euphemism of registration fee; but the effect would have been the same. They quadrupled in their four years the registration fee and they certainly would have doubled it again this year; but, of course, it would not have been road tax; it would have been a registration fee.
Our approach is more honest. While the proceeds of road tax are no longer in the budget directed to road expenditure, it is quite a reasonable approach to expect all persons using vehicles on the roads to contribute by way of road tax to the State finances, given the context of the overall contribution by the Exchequer to road works. Nor will we be bringing back something that was unique in the first instance. Most countries have a from of road tax for all vehicles whereby users contribute to State finances.
I want to say a word or two on the Housing Finance Agency which I believe will have a dramatic effect on house building in the next year, certainly, and in all our lifetime. On the question of house purchase finance, I am convinced of the need to set up the Housing Finance Agency for the purpose of tapping institution finance to finance house purchase loans. While it would be premature for me to comment at this stage on the likely details of the scheme to be introduced, I can say that the preparation of the necessary legislation is very advanced. I intend to circulate a Bill very shortly and to announce the policy to be adopted by the agency when the Bill is circulated. I hope the Bill will become law during the current Dáil session.
Of all the policies which we put forward in the election, this was one that caught the public imagination. I am glad to be able to say that the initial discussions we are having with finance agencies have shown that their enthusiasm is as great as ours and I hope that, as a result of the funds which will get into authorities, early in the new year we will see the effects of this, if we can get the legislation through the House between now and Christmas.
The decision by the previous Government in January 1980 to abolish grants for house improvement works, including water and sewerage, was universally recognised as a most retrograde decision. For the first time since 1924 there was no grant assistance for the improvement of existing houses. Unless rectified, this would have had serious adverse consequences in regard to the improvement of the national housing stock and would have denied many thousands of less well off families the opportunity of providing necessary basic needs such as water supply, sewerage facilities and bathroom. A comprehensive survey of the national housing stock carried out in 1980 showed that what many regard as an alarmingly high number of houses still lacked these amenities: 87,000 houses lacked an internal water supply; 141,000 houses lacked an internal toilet and 185,000 houses did not have a fixed bathroom or shower. These figures helped to quantify a serious deficiency in our housing stock and demonstrate the utter folly of the decision to terminate the home improvement grant scheme last year by the previous Government.
It would have been easy in the present state of our finances to justify deferment of the scheme, but to me this was a priority need. Under the new scheme of grants announced on 14 October by Deputy Fergus O'Brien, Minister of State, grants are available for the provision of water and sewerage facilities, bathroom, a chimney and fireplace with backboiler in any house without a chimney and fireplace, and extra bathroom to relieve overcrowding. The Government are satisfied that these are the five categories of work and housing authorities have decided to concentrate the limited funds available to the five areas of greatest importance. Although it is only a fortnight since the new scheme was announced, the public have shown a high level of interest in it. The response of householders has certainly confirmed, if it needed confirmation, that there was great need for the scheme and also showed an appreciation on their part of the Government's action in introducing such a scheme within such a relatively short period of time after taking office.
The taxation measures being implemented in this Bill will not, of course, be fully accepted by all. As I have already stated, additional taxation is never popular. I am, however, very pleased to know that the general reaction was one of recognition of the necessity in the very difficult state of our finances, recognition not only by informed bodies such as the National Economic and Social Council and the Central Bank but also by the public at large, of the very difficult state of the national finances. It is encouraging to know that we have support for the measures necessary, even though not popular in the short term, to put the national finances back in order. Despite what Deputy Briscoe said earlier on, anybody who mixes with people at any level knows that there is a sense of relief among the ordinary people that they have now got a Government that are prepared to act and govern the country and take unpopular decisions and not duck them and avoid them as Fianna Fáil did for the last 18 months. Regrettably, the time has now arrived where the price of past decisions must be paid. We cannot, as the recent NESC report pointed out, continue to spend £1.14 for every £1 we earn. Action is now particularly necessary and urgent if we are to protect the future by creating an economic environment in which the achievement of real and sustainable growth in employment and the maintenance and development of public social expenditure is possible. In so far as the services for which I am responsible are concerned, it would be grossly irresponsible not to face up to the necessity of providing the necessary additional funds to the local authorities and this expenditure must in present circumstances be matched by appropriate additional taxation. Any failure to take action now could worsen the very serious state of the economy and national finances with very adverse consequences on employment levels and future growth prospects. I would not wish the measures now taken to be assessed on the basis of their short-term popularity. Rather let them be seen as a clear indication of the degree of responsibility and concern for the future on my part and that of my colleagues in Government. I believe that view is shared by the majority of our people. An indication that there is a recognition of this also among Fianna Fáil backbenchers is the trouble the Fianna Fáil Whips are having getting people to speak on this debate today.
Listening to the Minister I was prompted on many occasions to interrupt but good manners decided otherwise, because he left himself wide open on a number of issues. He displayed the arrogance from which every Coalition suffered, but that arrogance is showing itself at a very early stage.
The Minister is living in cloud-cuckooland if he feels the measures taken in this budget are acceptable and pleasing to even a small number of people. Public opinion has shown the contrary. I have no doubt this Government will end up the same way as previous Coalitions — 1948-51, 1954-57 and 1973-77. It is more than a coincidence that during all those periods the people and the economy suffered. As I said, this is happening at a very early stage in this Government's term of office.
The purpose of this Bill is to implement the budget provision introduced last July. It is very clear that this is no more than a propaganda exercise on the part of the Government and is an effort to throw responsibility recklessly on the previous Fianna Fáil Government. The previous speaker concentrated on blaming Fianna Fáil for everything. He even went so far as to say that if the Coalition are still in power in three or four years' time, they will continue to blame Fianna Fáil. That is a very negative attitude for any Government to have and is indicative of the arrogance of this Government.
Everyone is aware of the pre-election gimmicks. The purpose of those gimmicks was to woo the voters and buy their votes, particularly the vote of the housewife, with the now infamous promise to pay her £9.60 per week. The last speaker was very clear why Fianna Fáil were on this side of the House. Everybody, especially the housewife, is very sore about the way they were conned by the Government. I do not use that word lightly.
Since coming into office the Government's programme has been foreign in every sense and has been basically the opposite to many of the goodies and all the sunshine promised to the voters in June last. Unfortunately, those promises will prove to be the most expensive ever made by any political party in the history of the State. When I say that, I do not refer to the cost of implementing all those promises because, as we know, many of the promises have already been forgotten and will never come to fruition. However, the small number that may be implemented will be the most expensive any political party ever embarked on. There is no doubt those votes cost dearly and as a result the economy will pay very heavily for a long time to come.
Prior to the election we were promised an immediate reduction in the rate of inflation. We were told the rate of inflation was very high and could not go any higher. We were told that under no circumstances could any responsible Government permit inflation to rise above the level that existed in June last. What happened? In one stroke the Government in their July budget added at least 5 per cent to the cost of living, while a reduction in inflation figures was a central theme of the Fine Gael proposals. This additional 5 per cent has pushed inflation from 17 per cent last June, when Fianna Fáil left office, to a minimum of 21 to 22 per cent. This figure has been admitted by all experts and before the end of next spring that figure may have gone much higher — I suggest 24 to 25 per cent.
The previous speaker referred to the NESC report which was prepared by an independent body. He said everything in it was gospel. There are many items in it which I do not think he would wish us to concentrate on. In that "gospel" the inflation rate is forecast at a much higher level by the end of next spring. This can only have disastrous consequential results for everybody employed, as well as those unfortunate people who are unemployed. I would hate to think of the terrible conditions under which many people will have to live because of the measures we are discussing here.
It is not surprising that the national pay talks have broken down. Last Tuesday the Labour Party Executive Council recognised this and voted by 11 to six to condemn the budget introduced by the Fine Gael and Labour Parties. We have an extraordinary situation here. On the one hand we have the severely damaging budget proposals put forward by a Government of Fine Gael and Labour and, on the other hand, the Labour Party Executive Council — including a number of prominent members of the Parliamentary Labour Party, including the Tánaiste — condemning the proposals in the July budget. That extraordinary situation proves beyond doubt that there are very obvious cracks in the Coalition Government.
It is no wonder the country is on a slippery slope. Not alone do many people not have any idea of what is going on at Government level, but the Deputies who supported those proposals do not seem to have any idea where they are going or what is happening. The prospects for wage moderation have been seriously damaged by spiralling inflation. A more damaging and demoralising fact is that not only is there as yet no end in sight as far as inflation is concerned but we have not yet reached the worst stages. The Government have committed themselves also to an income tax package which is regarded by every respected economic authority as utter madness, precisely because it will seriously add to inflation. It will be necessary to impose huge indirect taxes in next January's budget if the infamous package which has been calculated to cost in the region of £4 million is to be implemented. Like most people, I am seriously concerned at the major step the Government are taking in changing to indirect taxation which will affect all sections. One can readily see the very sharp decline in business and general commercial activity resulting from the additional indirect taxation imposed in the July budget and one shudders to think what the climate will be like early next year when further increases are imposed to meet the Government's commitments. Many of their own members claim that this is utter madness but the Minister for Finance has this millstone around his neck which he is planning to transfer to the public in January.
What can one say about the meaningless increase granted to social welfare recipients last July? The Minister granted a mere pittance of 5p in the case of an orphan and 85p for a widow. Such increases are totally insignificant having regard to the increase in the cost of living.
The parties responsible for these miserable increases have talked much about the elimination of poverty, but never before has this section of the community been treated so shamefully and so shabbily.
The NESC report published in September this year welcomes the increase in the value of benefits and allowances provided in the 1981 budget. It states:
The value of short-term allowances, other than child dependant payments were increased by 20 per cent while those of a long-term nature were increased by 25 per cent. The Council notes that the Minister for Social Welfare has publicly endorsed the Council's statement in Report No. 53 that those most in need must not suffer from changing economic fortunes over which they are powerless. The Council welcomes the increases as an attempt to meet this criterion.
What will the same council think of the shameful increases granted to social welfare recipients in July, particularly in view of the increase in the cost of living generated by various other increases in the same budget from VAT to small comforts such as the cigarette and the pint of beer? What have the Labour Party come to? In the past they claimed to be the champions of the poor and the downtrodden and claimed their origin from James Connolly. He must turn in his grave at what the Labour Party have done to the old, the unemployed, widows and orphans and all sections who are unable to speak for or look after themselves and need our assistance.
We in Fianna Fáil can hold up our heads proudly because during difficult times we ensured that at least the weaker sections did not fall behind. In fact we improved their lot by granting increases in excess of the rate of inflation. We were condemned for this by the then Opposition and they voted against these increases to social welfare recipients last January. I repeat that these were increases of 25 per cent in long-term benefits and 20 per cent in other benefits. The same people who opposed us then did not hesitate to go through the lobbies to endorse the miserable pittance granted in the July budget.
In the January budget our Minister granted an overall increase of 25 per cent and in the previous year the increases were between 20 per cent and 25 per cent. These substantial increases in consecutive years were in excess of the rate of inflation. The 3 per cent increase granted by the present Minister pales into insignificance in comparison. I do not make these claims out of any sense of bravado; I am expressing my total and utter disgust at the mean and insulting offer made to old age pensioners and the needy in our society. There is no excuse for it. Any statements from Fine Gael or Labour or some of the Independents who supported their proposals claiming sympathy with the poorer sections can be regarded only as hollow propaganda.
Many economists have conceded that we as a small country cannot afford this Government's programme. Industry is suffering seriously from the high level of inflation and we must also ask what these financial proposals have done to help young people obtain employment. Unfortunately the Government are so concerned with pursuing the infamous monetarist approach which has failed dismally in Britain that they have forgotten about young people and the community as a whole. We have the fastest growing population in Europe and approximately 50 per cent are under the age of 25. There is an urgent need to provide jobs for these young people and every Member must have been inundated during the summer with requests from young people or their parents to make representations on their behalf in the matter of obtaining jobs. It is tragic that opportunities are so limited and it is particularly saddening to read of many thousands chasing a couple of hundred jobs. Far from doing anything to help employment prospects the July budget has done quite the opposite. We were told, for instance, that there cannot be any further intake to the public service. Those retiring in the public service have not been replaced; vacancies are being left unfilled for long periods.
In these circumstances one cannot be blamed for thinking that the Government, rather than doing something to maintain employment and to encourage job promotion, are hell-bent on doing the opposite, on reducing employment. There has not been any action taken since the Government came to office to bring about a renewal of the employment programme. While making such comments it is as well to reflect on the achievements in regard to employment of the previous Government from 1977 until they left office. We implemented fully our employment targets and created a record number of new jobs.
That was done despite the undeniable fact that, like other western European economies, we went through difficult times during that period. All of us must accept that. Despite those difficulties the Government then did a reasonably good job to secure existing employment and to create new jobs. Many European countries are now investing in the creation of employment, and the IDA must be complimented for their achievements during those difficult years. It is particularly saddening, therefore, to see their position being undermined by the present Government. That is unforgivable and it prompts one to ask what do the Government hope to achieve. Do they want to create employment? Do they think at all about creating full employment? To judge from their actions so far, it is difficult to come to any conclusion except that they are not anxious to create more jobs. Indeed, the contrary seems to be the case; they seem to be anxious to reduce the overall level of employment.
The prospects for a new wage agreement this year are extremely bleak. The employers' and the workers' representatives are poles apart not only in terms of percentage increases but in the basic philosophy and in the confidence required to negotiate agreement in the interests of everybody. Their confidence seems to have been undermined by the actions of the Government.
Naturally, the trade unions want to maintain existing living standards—that is why they are there. On the other hand, the employers want to maintain competitiveness. The approaches of both sides to wage negotiations are as different as chalk from cheese and this incompatability is most evident at a time of high inflation, of rising prices, of lack of confidence in the future. A Government normally would be expected to narrow the breach but this Government do not seem to have any desire to bring the two sides together in negotiations. Indeed, their proposal to switch from direct to indirect taxation is leading to widespread industrial unrest and disorder.
I have said that the rift between employers and unions is very wide. Naturally the unions want to ensure that wage rises will keep pace with price and inflation increases so that the purchasing power of the workers will be maintained. Their resolve has been strengthened by the fact that take home pay, in purchasing power, dropped by 13 per cent during the term of the existing national understanding and that approximately 4 per cent of that is attributable to the July budget, which began a round of price increases that has continued without abatement. One has only to listen to one's wife after she has done some shopping. Prices have been increasing on a daily basis. In such circumstances workers and trade unionists will have serious reservations about accepting any agreement which will not provide for wages keeping pace with price increases and inflation.
Unfortunately, the budget last July did not contain any proposals to remedy this situation. Indeed, it did quite the opposite. It contributed in a big way to the present gap between the employers and trade unions. In view of their experience in the past few months one can understand readily the reservations of unions in regard to accepting any agreement which would not maintain present living standards. The measures taken in the budget were disastrous for the economy, for the employers as well as the workers, but particularly for young people who are entitled to hope to get employment in their own country when they leave school. It is the duty and the obligation of a Government to ensure that such expectations are realised.
Forecasts on prices now estimate that there will be a further increase of 20 per cent or more in 1982. That is not my forecast but of the economic experts whom I have already quoted from the NESC Report in which the Minister for the Environment placed such confidence. I have already cited it in respect of a few items to prove that the Minister was wrong. According to the report prices will rise by 20 per cent in 1982. The element of inflation imported by the Government in their switch from direct taxation to a purchasing tax means that 3½ per cent of the 20 per cent will be caused by Government action. That is a figure which may be considered the absolute baseline by the unions during the negotiations and it is very obvious the employers are not in any way at present interested in negotiating figures in that region.
The main concern and interest of the employers is to maintain competitiveness abroad. The recommendation in the report prepared by the FUE was that there should be an initial pay pause followed by a constrained pay rise. This pay rise, the report stressed, should not be based on any attempt to keep up with inflation but rather pitched at such a level that the rise in production costs here would not exceed those incurred by our trading partners abroad. Subsequently, the special commission of the three wise men was selected by the Government to determine the size of cost increases which would be appropriated and we all know that they came up with the norm of 6½ per cent. Obviously, that was clearly the figure the employers had in mind. Equally clear is the determination of the trade unions and the workers to scorn any suggestion that pay rises should be restricted to this low figure. We have, therefore, a gap of at least 10 per cent between the two sides and with both parties looking at the problem from completely different angles there can be little hope of bridging the gap which in my view is necessary to bring about industrial peace for the next 18 months to two years.
There is ample evidence that the Irish economy is in serious difficulty and that there is an urgent need for properly planned strategy by the Government. Unfortunately, past history of Coalition Governments has shown that they do not succeed. Indeed, since the Government took office in July they have out-done previous Coalition administrations in their efforts to win the wooden spoon by pursuing policies that can only be disasterous for a small country such as ours. In a very short time the Government have caused serious and severe damage to our prospects economically. They have at every possible opportunity endeavoured to undermine public confidence and to spread gloom and defeatism in every direction.
We all accept that the western world has been going through a difficult phase in the last two years and nobody could expect that we as a small nation could possibly avoid the effects of this depression, whether it is large or small. The last Government, under the leadership of Deputy Haughey, concentrated all their energies and efforts towards bringing our small economy safely through that recession. Government planning included measures to maintain employment, to keep prices under reasonable control, to protect living standards, and, above all, to protect the living standards of the old, the needy, the social welfare recipients and other low income families. Those sections of our community are always vulnerable but particularly in a time of recession. They expect and should have protection from the Government of the day to ensure that at least their existing living standards are maintained. Tragically, however, for those people the Government seem to be hell-bent on pursuing the now internationally accepted failures of a monetarist policy, a policy which has been pursued with disastrous results by our neighbouring country. Those policies have been planned by economists without any consideration or feeling for the most vulnerable sections of our community, for those who are weak and not in a position to speak up for themselves or defend themselves against rising prices that occur daily. Those economists have drawn up policies and prescribed harsh measures without any regard to the capacity of any section of our community to bear that burden.
The budget, and the financial proposals being debated at present, hit those sections extremely hard. They have made the position of such people weaker and made those people more vulnerable than before. We must also consider the daily round of price increases. The measures taken in the July budget do not do anything to help our young people. In fact, what they did was to raise fears in the minds of practically every individual, of every employed worker, regarding his or her future and their ability to hold on to their jobs. Unfortunately, the Government have not yet finished. We have been promised that taxation reform will be pursued in the budget in January. The methods being employed to reform that taxation system will worsen further the situation of the weaker sections of the community. Increased indirect taxation will lead to a major shuffle in the ability of people to exist from day to day. That policy has been criticised by the ERSI and very prominent members of Fine Gael and Labour. It seems, however, that the Taoiseach, his Minister for Finance and other members of the Government feel that they are in office because of the unrealistic and irresponsible promises made during their election campaign earlier this year. They are now hung by these promises which weigh very heavily on their shoulders. Unfortunately, they will weigh more heavily on the shoulders of the workers of the country after next January.
All responsible Members must concede that to pursue further tax changes will only cause serious disruption to the economy. That is why the ERSI has called on the Government not to carry through their other proposed changes in taxation next year or, at least, to postpone them until public finances improve. It has been calculated that the cost of the proposals in a full year will be in the region of £500 million. To make up that figure by indirect tax increases will have a massive effect on the cost of living. It will affect the cost of living upwards by as much as 6 to 7 per cent. Meanwhile, the Government must also raise taxes to meet their stated objectives of eliminating their current budget deficit within four years, a deficit which is estimated now at £780 million. If that reduction is evenly phased, close to £2,000 million will have to be raised next year.
One does not have to be an economist to realise that that type of proposal is just not on, particularly during this difficult time that the economy is now going through. We are still faced with the trade recession that is affecting every country in Europe. It is no wonder that the trade unions and the workers find it extremely difficult to trust that any arrangements negotiated will last for a year or 18 months. The Taoiseach should face up to his responsibilities and make some effort to meet the employees and trade unions to bring about some agreement. Otherwise we will be faced with a year to 18 months of industrial discontent, which can only worsen a bad situation. Much of this was caused by the Government's propaganda exercise at the expense of the electorate. It was a very expensive exercise to implement. It has been described by a number of economists as a mad tax package. We all know that it was a deliberate plan to win votes. This Government cannot go on adding irresponsibly to inflation while dragging the living standards to everybody down even further, in many cases as far as the poverty level.
Let us take a look at the £9.60 per week that was promised to housewives. The Taoiseach has assured us that it will be implemented in the budget next January. During the election campaign we all understood that it would be implemented immediately if the Coalition parties got into office. But it has been put off until next January. There has been no research into the difficulty of putting this package together or into the financing of it. It was obviously rushed into with closed eyes to the disadvantage of the economy and of every worker in this country. Who will qualify for this £9.60? Will only the wife of a taxpayer qualify? Will a widow qualify? Will the wife of a non-taxpayer qualify? What about the wife of an unemployed man? We must remember that the whole purpose of this promise was to show appreciation of the value of the wife who stays at home to look after the family. So when it comes to its implementation it would be totally dishonest to decide to pay just one section and to say that because a husband does not pay tax his wife, who also stays at home and looks after the family, is not entitled to the money. That wife is one of the many thousands of people who fell for this gimmick. How will she feel? But we do not know the answers to these questions because this whole matter has not been spelt out clearly. How will this be administered? We all know that the tax officers are thoroughly demoralised at present because of a shortage of staff and accommodation. A figure of 300,000 has been mentioned as being the number of recipients of this £9.60. How it has been arrived at I do not know. But let us just consider the cost of implementing this scheme. It will cost millions of pounds. Where will it all stop? Will it end up in total chaos, total disaster? At present, if one has a query for the Revenue Commissioners or for the tax office, it takes some time to have it dealt with. This will add a completely new dimension as far as the Revenue Commissioners are concerned. We are not prepared for it. It will be totally impossible to implement without causing chaos for everybody concerned.
This Government went into this tax reform package as an election gimmick with their eyes totally closed. They are now strung with this promise whether they like it or not. They obviously feel that this is something they cannot renege on and that they have to go through with it. The campaign in that regard was dishonest and ruthless and it was designed to fool the ordinary housewife. We have seen the results. I can assure the House that there are many housewives who are now waiting for an opportunity to tell the Government exactly what they think of the £9.60 package and how strongly they feel at the way they were treated in regard to that deal.
I listened to the former Minister for Finance, Deputy Richie Ryan, on radio last Sunday. He was completely honest in his remarks about the £9.60. I agree with him also when he says that the State does not have any right to interfere in the private affairs, financial or otherwise, of a husband and wife. Most Irish husbands are considerate and generous. Those expressions were used by the former Minister for Finance last Sunday and I agree with them. We obviously have a number of households where the husband may be a little bit mean as far as financing the home is concerned. Will this scheme change that position in any way? It will not make any change whatever. It is debatable, judging by some of the rumblings going on within the Coalition, if the Government will still be in office next January to introduce those proposals. It will be very interesting if they are still there to see how they will introduce this package and how it will be implemented. We are all aware of the serious strains within the Coalition parties. The Government have done many irresponsible things since they came into power. Unfortunately this will be very detrimental to our economy and to employment.
Since last July unemployment has risen very sharply and living standards have been reduced. It is interesting to compare that with the years 1977 to June 1981. I have already referred to the job creation programme of the Fianna Fáil Government during those years and the very excellent work done by the IDA under Deputy Des O'Malley as Minister for Industry, Commerce and Tourism. During that period nearly 50,000 new jobs were created by the IDA. Our credit rating abroad was very good. We had a very good reputation and our inflation rate had come down to as low as 16 per cent last June.
Since the Coalition Government came into office all that has changed. The Taoiseach and his Ministers have done their utmost to create the image abroad of a bankrupt country so that our credit rating has dropped drastically in the last three months. If this continues it may be very difficult for the Government to borrow abroad.
I would like to direct the Deputy's attention to the fact that we are discussing certain tax proposals. It is obviously a wide ranging debate but I would like the Deputy to relate these proposals to the economy rather than venturing into less specific areas.
I certainly respect your views but I have been relevant to the consequences of the budget proposals. If I should stray the slightest please remind me.
The Chair is reluctant to do that. May I just remind the Deputy of the fact that he and any other speaker is perfectly in order providing he relates what he is saying to the taxation proposals that are in the Finance (No. 2) Bill.
I would like to refer to the various increases implemented in the taxation proposals last July. The VAT rate was increased from 10 per cent to 15 per cent, an increase of 50 per cent. This was a vicious increase and has hit everything required to run a business and a home as well as general and ordinary services. Business and industry have been badly hit. This has resulted and will continue to result in a serious loss of jobs. It hits small businesses and small investors particularly. The small business in Ireland takes up a large proportion of the total number of jobs provided. Spin-off resulting from the general upturn in such business has very beneficial effects for everybody. There is additional revenue to the State from PAYE, PRSI, rates and so forth.
The taxation policy which increased VAT from 10 per cent to 15 per cent will put to the wall many small business people who employ two people, 20 people or more. Those people find it very difficult to operate under this additional crippling overhead. A small business has to carry a certain amount of stock. That business must pay VAT when purchasing that stock. The increase in VAT means an additional overhead as far as a small business is concerned which must have an effect on the ability of that business to continue to give employment and to continue to give the revenue required by the State.
I have always advocated, no matter who was in Government, that more incentives should be given to the small business and the small investor. This private sector provides the bulk of employment but for some time those people have been harshly criticised by the so-called socialist sector. It is extraordinary that this criticism generally comes from people who have never provided jobs for anybody and if requested to invest in an undertaking which might give employment for one or two people they would turn the other way. Unfortunately it is true that in Ireland we have always had a fair sprinkling of the armchair socialists and critics who advocate that we should nationalise this and that.
The Deputy is admitting he is a capitalist. I am glad to hear him admitting it.
I would ask Deputy Sherlock to reserve his comments. He will have an opportunity later on to contribute to the debate.
I am sorry if I hit Deputy Sherlock where it might hurt a little. I would appreciate it if I could continue without interruption. When he is speaking I will not interrupt him, I can assure him.
The Deputy is a true capitalist.
Deputy Brady is long winded.
I shall continue and I will not allow interruptions from that sector to put me off the point I am endeavouring to make. If it hurts some people, so be it.
The Deputy is going around in circles and is making no sense whatsoever.
Where it is due, credit should be given to the private investor, the small investor, the investor who will put his money where his mouth is, unlike many others. A Leas-Cheann Comhairle, did I detect name calling from my right?
If the Deputy did, I did not hear it. I suggest that the Deputy should proceed and he can be quite sure that the Chair will give him all the protection he requires.
Thank you. A number of private companies have done a tremendous amount for employment. I should like to pay tribute to those companies. We all know that some of the bigger companies have done very well. I shall adhere to the policy of not naming any company. A number of private companies have given excellent employment and excellent conditions to their workers. It is a tribute to them that they have been recognised internationally for the tremendous advances and progress they have made in providing employment and advancing the economy as a whole.
There is a tremendous spin-off to the State from those companies. Therefore, it is alarming that this Government should have taken a major step in their taxation proposals with a tax imposition on private enterprise and business. The new levy being imposed on the banks is, perhaps, the first step in the direction of nationalisation. This will result only in scaring off many prospective investors who have been considering setting up businesses in Ireland and there will be a loss of job opportunities and job creation. It may also have an effect on existing companies who may find it necessary to revise their future investment policies and their levels of investment here, and perhaps look at possibilities elsewhere. This will be detrimental to our economy. In a country with a very young population where we must provide at least 40,000 new jobs each year to meet the requirements of young people leaving school, a policy of imposing additional levies is suicidal.
Unfortunately that is the policy of a number of non-party Deputies. It would seem that some of those Deputies may be dictating policy to the Government. If the Government wish to survive with the assistance of one or two Deputies who are hell bent on this type of policy, I would say to the Government: "It is time you looked at the price of the type of support you are getting from such a sector." If the Government proceed with a policy of imposing levies on private enterprise, big or small, that will have disastrous results on employment and on the economy.
The doubling of VAT has affected a very wide range of items. Time is moving on and it is not my intention to continue to speak for much longer, but I should like to mention that the doubling of VAT has affected seriously the prices of practically every commodity: ice cream, children's drinks, sweets and school books. Late last year the Fine Gael Party, with the support of the Labour Party, put forward a motion to remove VAT completely from school books. At that time the rate was 10 per cent. Including school books in VAT and increasing the rate from 10 to 15 per cent shows how hypocritical the Fine Gael and Labour Parties can be and have been. If they were sincere in what they said last year about taxation on school books, why did the Minister for Finance not remove that taxation completely in his proposals last July?
Increased taxation on school books affects everybody and, more so than anybody else, it affects children from poorer families and families who are not so well endowed financially. The cost of school books today is enormous. Any Deputy with young children going to school will appreciate that I am speaking the truth when I say that. Any additional tax imposition on school books must be condemned by every right-thinking person in this House.
Since the last budget other areas have been affected also. Householders were affected by the removal of the mortgage subsidy. Single people have been discriminated against. I appreciate that those two subjects are not part and parcel of this debate but I just mention them in passing. There are many other aspects one could mention. One could speak all day long if one wanted to cover all the areas which have been seriously affected and the values which have been seriously eroded since this Government took office.
Road tax was restored. The motor car is no longer a luxury. It is a necessary mode of transport for workers to get to and from work. We had the reimposition of the road tax. We had an increase in the price of petrol because of the rise in the VAT rate. We had an increase in the cost of servicing and repairing cars because of the rise in VAT. The motorist has been penalised more than anyone else since last July. Let us be quite realistic and quite honest. The motor car is no longer a luxury; it is absolutely necessary for people to get to and from work, particularly in rural areas. Every right-thinking Deputy should condemn a further taxation imposition on the worker particularly on people who need their cars to get them to and from their places of employment.
There are many other areas with which I could deal but various points have been made by other speakers and there is no point in duplicating. I must condemn this Bill, these budget proposals, which have set this country back so far and which will prove to be disastrous in many respects. These proposals extraordinarily enough were supported by a number of Independents who had condemned them but yet went through the lobbies and voted for them. Of course this is what is known as "mind thy seat as long as thou possibly can." Deputy Kemmy is particularly adroit at this. Perhaps it is not too late in the day to ask those Independent Deputies to be not only honest with themselves but with the people who elected them, whom they represent in this House, and to vote in a way they consider to be in the best interests of their constituents, rather than merely for the sake of holding on to their seats.
The Deputy should behave himself.
I do not need Deputy Kemmy to remind me to behave myself.
A maiden in distress.
Since coming into this House Deputy Kemmy has demonstrated to the whole country what he stands for, that is the eleventh commandment, hold on to thy seat irrespective of what may happen. At least in the Fine Gael Party in Government there is some honesty.
Deputy Brady should address himself to the Chair and not to Deputy Kemmy.
Is Deputy Brady going to give away his seat next time round?
That has nothing to do with taxation. One can be perfectly sure that they will benefit the working class people who elected Deputy Brady.
The Minister of State listened without interruption; that is what Parliament is all about. We are all here to express our views and should be allowed do so without interruption. I hope Independent Deputies will vote as they think their constituents require them to vote and not adhere too closely to that eleventh commandment.
(Dublin North-West): When Fine Gael left Government in 1977 there was an inflation rate obtaining of less than 8 per cent and unemployment was falling. The Coalition Government during the 1973-77 recession made a valiant attempt to get the economy on a sound footing. In 1977 they had achieved that aim, there being then laid a solid foundation for an expansion of our economy. However, when Fianna Fáil took over, those hard won savings by the Coalition were rapidly eroded by the dynamic spending spree of the Fianna Fáil administration. When the Coalition resumed power in 1981 they found themselves with an inflationary rate of over 20 per cent, with unemployment up by 30 per cent.
In my contribution to this debate I shall be concentrating on two major issues, the national economy and a reference back to my constituency where, as a result of those policies of the previous administration and of worldwide recession, unemployment in Dublin North-West has increased by over 50 per cent, and we have twice the national average of people under 25 years of age. As a public representative of that constituency I feel it incumbent on me to draw the attention of the House and of the Minister for Finance and his Department to the terrible conditions prevailing there, rendering it the most under-privileged constituency with regard to employment and the adverse effects that the massive increase in the cost of living has had on inhabitants of that area.
In the past four years we have had four Taoisigh. We have had five Ministers for Finance, including ex-Deputy Michael O'Kennedy, the present Commissioner in Europe. With so many people at the helm it is no wonder the economy went off the rails on a number of occasions in that period. In such times—when politicians and political leaders are volatile because of a change of leadership, of policies and tactics at the top — it is essential that Government Departments and their heads retain strict control over the country's finances. One might draw the analogy that if one is sailing a yacht and the captain is being changed continually—as during that period when we experienced nine changes in the Department of the Taoiseach and the Department of Finance—it is imperative that the crew be in a position to steer and keep the ship sailing.
In assessing the economy of any country two basic doctrines obtain, doctrines which have been promoted by two world famous economists whose names have been in part loaned to them—one of them is Milton Friedman who was awarded the Nobel Prize in 1976 for his policy of monetarism. This policy basically is one which refers to the availability and use of money as a barter, as a system whereby an economy can survive. The John Maynard Keynesian theory is one allowing many other factors to be taken into account in assessing the wealth of a country, its credibility, its power and ability to grow. Such policy would take into account assets such as raw materials, the calibre of the people of the country, buildings, creativity and others. In between there is a third policy, that is one of commonsense, one which we in this country should attempt to pursue at all levels and at all times. We cannot standardise our economy, our employment, industrial exports or emigration. We cannot standardise those as do some other western European countries, notably Sweden, Denmark and West Germany. We have a very mixed population, with a very mixed distribution of its talents throughout the country. We have also a mixed distribution of raw materials. Some parts of the country are very viable in the farming sphere. In other parts we would be very viable in the field of economics and in yet others in the field of tourism. The same would apply to fishing and many other industries based on natural resources.
It is unfortunate that, in order to rectify the over-spending, inflation and massive increase in unemployment occasioned over the four years of Fianna Fáil administration, most sections of this Bill apply to increases in taxation, increases which will possibly hit those least able to pay. Generally speaking there is broad agreement to a transferance from direct to indirect taxation. It is contended that in many ways it constitutes a more equitable system of taxation, of raising revenue.
There are many sections of the Finance Bill that as an individual one could disagree with and basically one has reservations when extra taxation is imposed on any section. When discussing the Finance Bill, I shall refer in particular to the massive increase in the cost of the public sector and the increase in employment in that sector. I shall refer also to the projected increase in employment in the public sector. That sector is basically concerned with creating conditions for optimum economic, cultural and political development.