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

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

Mrs. Owen

Before the Adjournment I spoke about the situation we found when we came to office. I could understand how we got into that situation when I heard a Deputy ask a Minister to make an educated guess about something. Governments are not run by guesswork and I am glad the Minister in question did not give a guess, educated or otherwise. Perhaps it was this policy of guessing that got us into our present difficult situation.

In the past few months I have become very conscious of just how discerning is the general public. People cannot be hoodwinked any longer. They were hoodwinked in 1977 and they realised that. Now they are beginning to see we have a Government and a leader prepared to take courageous steps to stop this terrible slide down the slippery slope. If we want the corrective measures to be put into action we must have the people behind us. This Government propose certain tax reform measures, measures that people walked in their tens of thousands in the streets of Dublin to obtain. The marches attracted the largest gathering of people since the Eucharistic Congress or the Pope's visit. The people want tax reforms.

As I pointed out before the Adjournment, the equity of the tax code was very unclear to most PAYE people. Mr. Ben Carney, President of the Dublin Council of Trade Unions, who organised the marches, has said that there will be no diminution in the tax reforms they are demanding. The Government are courageous and despite being pressed by the IMF, the ESRI and many members of the Opposition to put off the tax reforms, that nettle must be grasped firmly. I am confident this Government have the guts to follow the old adage "Never put off till tomorrow what you can do today". The pattern in the past four or five years has been to keep on giving in the hope that somebody else would carry the burden later. That time has come and this Government are prepared to shoulder that responsibility.

Deputy Liam Fitzgerald, who spoke before the Adjournment, was critical of the Taoiseach. The defence being put up by the Opposition is no defence. They have been caught on the hop. During the election campaign Fianna Fáil members —who never countenanced that they would be in opposition after the election —tried to counteract the goodwill created by the commitment of Fine Gael to recognise the work and the worth of stay-at-home wives. This was an innovative and caring policy put forward by people who are concerned about the thousands and thousands of women who are the backbone of the country. I regard them as unsung heroines. I say alleluia for people such as the Taoiseach and Senator Gemma Hussey who spearheaded the movement to recognise that section of the community and to acknowledge the tremendous work carried out by them. Without them the country could not function. I am also pleased that this Government realise that housewives have eyes that need testing and have teeth that need dental care and that they will benefit under the social welfare scheme. I accept that these measures will cost money but it is wisely spent money. The lending agencies will see that it is prudent to introduce measures that bring about a more equitable system.

I am particularly pleased with our taxation proposals which will recognise single parent families. The tax system will give the same benefits to a single person as it gives to the chief breadwinner. That is particularly pleasing to me as a child of a widow who had to raise a family without getting tax concessions as the chief breadwinner.

This Government have an opportunity to deal with the public sector and they must be firm. The people will accept the harsh measures that are necessary if they feel they are getting value for money and if they see discipline is being exercised from the top. We can exercise the discipline which has been sadly lacking for a number of years.

We must continue to support the Government's efforts to attract investment, foreign and domestic. The rate of unemployment is not good but it is especially bad in the case of school leavers. As a housewife I see as the most serious effect of unemployment the lack of an opportunity for young people to develop the habit of working, of getting up in the morning and having to go to a third level educational institution, a factory, office or whatever. It is our responsibility to provide opportunities too for young people to work and the incentive to start their own businesses.

That is why I welcome the proposed youth employment scheme. We have a responsibility to provide the young people with the opportunity to develop skills so that they in turn can lead this country into the next century, perhaps even lead it better than it has been led for the last few years. The habit of unemployment is dangerous and debilitating and we must do all in our power to get rid of it. I applaud the efforts of the IDA, although in recent months many brickbats have been thrown at them. Last week they reported over 900 small firms had started up giving an enormous amount of employment. We must accept the fact that we have to learn to crawl before we can walk.

We must explore every avenue open to us. I am a member of Dublin County Council and realise local authorities have a duty to provide suitably zoned land to allow industrialists to open factories and create jobs. If the central purse cannot pay for all the services needed to make these lands usable for industry we must introduce mechanisms and legislation to allow a coming together of the industrialists; the people who want to supply the jobs and the Government. If we must introduce new legislation, so be it. We have come to the stage where the public purse is straining and cannot be expected to pay for everything. As I said, I welcome the opportunity for the local authorities, the Department of the Environment and the industrialists to get together to open up the lands needed for new industries.

The people would condone these enormous budget deficits if everything was grand, but it is not. They have not seen any benefits for these very big deficits and borrowing. There is one area where it is possible to get value for money. The budget for Dublin County Council is in the region of revenue £76 million and capital £20 million. Out of that a small sum is allocated for community grant schemes. In 1980 £121,000 was utilised by the council to help finance 122 separate small projects — scout groups, preschool groups, drama clubs and all sorts of local groups which are providing social services in their areas. We could take a lesson from that because that is money well spent. If we must spend large sums of money let us get value.

We have a situation where vast increases in pay and social welfare payments are not on. An area where the Government could get value for money is in financing the many excellent voluntary organisations. I am very proud to be a member of a party who said in their policy for Government that they would recognise more the work of these voluntary groups. There are many types of group, some of them aimed towards women, such as Women's Aid, AIM, Cherish and ADAPT. These organisations do not need vast sums but the amount of work they do which could not be done by State agencies is enormous. For very little money these groups could help us fight poverty. We cannot put a value on the voluntary work done by these groups.

The ICA and the Irish Housewives Association give a different type of service. They are more socially orientated. Other groups like St. Vincent de Paul, Simon and ALONE, play an enormous part in society. If a small sum of money can help these groups to provide a service and help combat poverty, that will be money well spent.

The Government are providing the leadership needed. They are going to stop the drift and the days of inactivity and get rid of the "it will be all right on the night" attitude. Only firm leadership and prudent management will get us out of the doldrums. Promises will not do it. If the people realise that what we are doing is being done for the benefit of this country and not for any local or sectional interest, they will be behind us. Deputy Garret FitzGerald's Government can help put this country back on its feet.

Mr. Byrne

(Wexford): Is cúis áthais agus onóir dòmsa bheith ag caint don céad uair anseo inniu. It is a great honour and privilege for me to be here today to make my maiden speech on the Finance (No. 2) Bill. I am very conscious of all the great men who have gone before me and who have made worthwhile contributions.

It was with some amusement that I listened to the Minister for Finance when he said, moving the Second Stage, that the general reaction from the public to the measures proposed in the budget was one of acceptance of the unavoidable. He must not have spent very much time in the county in which I live. The general reaction to the budget was one of disgust, disappointment and disbelief. The Minister and his colleagues have overplayed the "blame Fianna Fáil" card. The public are not interested in excuses; they want the action which is expected of a Government. The budget was regarded as penal in every respect and the Minister should have no illusions about it. The Coalition of ultra-conservatives, socialists and the "catch-me-if-you-can" brigade are well aware that this Government are being hailed as the poorest, the shakiest and the most indecisive. This has been clearly demonstrated by their refusal to test the acceptability of the budget in a by-election in Cavan-Monaghan. When the Government sent their precursors to Cavan-Monaghan they got a fright because the message came back that Fianna Fáil would easily win. The result is that the people of this constituency are to be denied their right because of the cowardly attitude of the Government. If they are so satisfied with the level of acceptability of the budget, why did the Minister on so many occasions during his speech make silly excuses for its severity? This trend was continued throughout the debate by many Fine Gael speakers who spent more time making excuses than worthwhile contributions. Other Fine Gael speakers have agreed with us that the measures imposed were ill-begotten and an insult to the people.

We recall before the June election the confidence with which Fine Gael and Labour were urging the electorate to change the Government. They had the solutions to all the problems, but where now are those solutions? Following a hasty get together with Labour and an expensive courtship of the Independents, Fine Gael assumed office. When power comes in the door the risk of contamination goes out the window. This hasty marriage of Fine Gael and Labour proved difficult even on honeymoon because mother-in-law, Deputy Jim Kemmy, was sleeping in the same room with one eye open. Then the electorate were told when the Government came down to earth that they were not aware of the state of the country's finances. It is a poor reflection on them that they should make this suggestion, having conned the electorate into believing that they knew it all.

Fianna Fáil are opposing this Bill because of the hardships which have been imposed on all sections of the community. A brick wall has been built across the road of progress. Let us look at the education scene and observe how this penny pinching policy affects it. The education of our children must be above economics but that is not to suggest that money is ill-spent in educating our young people. Our education system leaves a lot to be desired but we had been making significant progress. The hardships imposed by the budget have seriously undermined and curtailed that progress. The ordinary parent, already worse off due to massive increases in the prices of basic foodstuffs, has now to face a 15 per cent VAT charge on schoolbooks. These books are an absolute necessity but due to this increase in VAT parents simply cannot afford them. Let not anyone say that the free book scheme, which has operated well for some years, will solve the problem. It will not do so because the scheme is grossly inadequate to cover normal costs. Certainly it was never designed to cover VAT charges. If children must do without the books necessary for their education not only will it make it more difficult for them to learn but there will also be a psychological effect. The fact that their parents cannot afford the books will be the subject of some derisory remarks at school which may have a lasting adverse effect.

While we welcome the changes in the third level education grant scheme we would point out that some of the schemes were advertised as being available to all leaving certificate holders irrespective of whether they had passed the examination in 1979, 1980 or 1981. Recently, however, the Department of Education sent a circular to all county education officers saying that only those who had passed the leaving certificate examination in 1981 would qualify. These are changes in mid-stream designed to save money at the expense of the nation's education. Many youngsters who had set their sights on college education, having made all their preparations and having foregone other opportunities, had their hopes dashed by the callous stroke of a pen. It is a case of losing the ship for a penny-worth of tar. This is not the only area of education where proposed savings will do untold damage. The need for money to fund the election promises dictates policy. The raising of the school entry age will have a detrimental effect on child education, but since this is the subject of another debate I will not discuss it further now.

The working man is hard hit by the jump in petrol prices from £1.80 to £2.21 per gallon. For the average man working away from home this imposition represents a big slice of his pay packet. The re-introduction of car tax, the VAT increases on cars and the 41p increase in the price of a gallon of petrol combine to make the cost of motoring one of the greatest burdens on the weekly pay packet. Today the car is as essential as the kitchen table, an absolute necessity. The price of the pint, which was part of the worker's daily life, has jumped almost out of reach since this budget. The worker, too, needs his enjoyment.

The housewife is expected to make ends meet despite the inroads already made into the pay packet. Increases in the prices of coal, gas, electricity and all essential food items make the task miserable and leave little for activities outside the home. With the strain of modern living in this age of hectic activity, it is necessary for the housewife to be able to afford to get away from it all sometimes. Of course we will be told that the £9.60 per week will alleviate this burden but this is an election confidence trick.

During the election the impression was given at every doorstep that if Fine Gael got into power cheques would flow to all and sundry. Depriving children of their proper education, this is what will pay the £9.60. The £9.60 arrangement will have the effect of leaving the household worse off, mentally and financially, because of the interference by the State in a private family matter, a point driven home forcibly by Deputy Richie Ryan, a member of the Government party who conceived this gimmick. Evidently the Minister for Finance and his Government believe that the breadwinner is no longer giving or capable of giving sufficient money to his spouse. In 99 per cent of Irish homes this financial arrangement every week was an indication of love, trust and appreciation. How dare this Government interfere in the intimacies of marriage. It will cause friction in family life. This proposal will have the effect of civil servants being paid out of taxpayers' money in order to take money out of the husband's pocket to be given to the wife, the end result being that the household will have less.

The budget proposals have brought the farmers on to the streets. Never before were farmers so hard hit. Their declining income has hit an all-time low following this budget. Prior to the June election we heard spokesmen of Fine Gael on agriculture declare that inflation was the farmers' greatest enemy. In one fell swoop this Finance Bill has added 5 per cent to inflation, raising it to the impossible level of 22 per cent, and it is still rising. Developing farmers cannot now meet their borrowing repayments because of this drastic increase and confidence has hit rock bottom. All farmers, large and small, are now crying out for aid, a call falling on deaf ears.

I should like now to quote from Farm-scene in The Irish Press of November 3 1981, the caption of which reads: “Why Wexford is leading the fight”.

These Wexford men cannot be taken lightly. According to the official ACOT figures, the county now produces an impressive 10 per cent of total national agricultural output; between 1974 and 1980 in Wexford cow numbers went up 60 per cent and milk output doubled to 40 million gallons, cattle production went up 10 per cent, cereals up 11 per cent, beet up 50 per cent and sheep numbers held steady while they fell almost everywhere else...

Wexford farmers borrowed heavily to invest in their land and to modernise their production and increase output. They achieved their objective, as the figures show.

But they are now caught in the crippling squeeze between high interest rates and costs and low produce prices. Many of them simply cannot meet their repayments and feed their families as well.

While we do not condone the actions of the protesters at present it is easy to understand why they are on the streets. My heart goes out to the farmers of Ireland. Farmers will remain on the streets and they are being supported by members of the Government who fed agriculture's greatest enemy, inflation.

Agriculture is the nation's primary industry. This budget suggests to me that the present Government have no intention of recognising that fact. That was made clear by Deputy Sherlock here this morning and by some other viewpoints expressed, including those of Deputy Michael D. Higgins. Because it is our basic industry it is essential to develop its potential to the maximum.

Tremendous development has taken place under the farm modernisation scheme, a scheme introduced following our entry into the EEC. The farm modernisation scheme encourages farmers to adopt and follow through a plan to develop their particular farm in order that it may reach its full potential. Many farmers have taken advantage of the incentives afforded under that scheme. Since July this year the numbers availing of the scheme dropped suddenly, in some instances down to 50 per cent, solely because of the lessening of grants. Farm building grants, drainage and reclamation grants have fallen by 5 per cent and incentives for the purchase of mobile equipment, such as tractors, machinery and so on have been abolished altogether. Grants for agricultural development form but a small part of the expenditure on any given project, sometimes as low as 10 per cent, leaving the rest to be funded by the farmer himself. The incentives under the farm modernisation scheme were sufficient to encourage farmers to embark on a development programme which in the short and long term would be of tremendous benefit to our economy. However the lessening of grants has now upset that balance. Farmers are now discouraged from availing of grants at their present level. It must be remembered also that when a project today is being assessed for grant aid an out-of-date yardstick is applied, to add to the discouragement already obtaining. The lowering and indeed complete removal of grants mean that we shall fail to attract farmers to this scheme. To date farmers who have been in close contact with their advisers are already taking part in the scheme. Henceforth we shall have to concentrate on the people who have had little or no contact with ACOT and the advisory services in order to encourage them to avail of the benefits of the scheme. County committees of agriculture had made great strides in attracting those farmers who had been slow to join. Barriers were being broken down and such farmers were contemplating entering, a desirable step in the interests of our economy overall. This dreadful change of tactics by this penny wise, pound foolish, anti-farmer Government is now causing such farmers to have a re-think. There is a growing lack of confidence in this Government daily becoming more evident. Farming is taking a backward step. It must be remembered that agricultural development to date has been considerable, the fruits of which will be seen to great advantage from now on. But this sudden falling off of farmers from the farm modernisation scheme will stunt the growth of our greatest industry. Agriculture still constitutes our basic industry and if it is not doing well the nation suffers. It is an indictment of the Coalition Government that they willingly and knowingly contribute to a deterioration in our basic industry.

The most serious burden on any economy is that of rising unemployment. The budget proposals, without the shadow of a doubt, have contributed enormously to rising unemployment. Unemployment was at an unacceptable level but this Bill has escalated it beyond imagination. The instructions to every Department to stop spending will cost the nation dearly. Raising the school entry age will cost 500 jobs. The building trade which has always been a great employer has now hit hard times. Cuts in public expenditure, housing, farming, school building, etc., will increase the numbers unemployed enormously. The car industry, because of the adverse charges in the budget, for the most part has gone on a three day week and workers, salesmen, transporters, suffer. This industry is a big one and the present setback hit hard and suddenly.

Young couples who had the good fortune to be allocated local authority houses and who are in the process of buying them out, or young couples who are building their own houses, if they become unemployed will find it impossible to meet their repayments. Those in local authority houses will have to go back to paying rent and those building their own houses may suffer the iniquity of losing their homes and find themselves on the local authority housing lists.

The policy of Fianna Fáil has always been to encourage people to own their own houses, a good policy because when a person owns his house much more will be thought about it and it will be looked after better. The unemployment that this budget has caused and will cause is a thumbs down for that policy.

The budget proposes that the combined total of income from the young couple be taken into account when they are being assessed for eligibility for loans. If the combined income is over £7,000 we most likely will find that because those people are so well off they will have to ask the local authority to build houses for them. This short-sighted attitude is nothing short of stupidity. The Coalition are not interested in giving loans for house building. It is unjust to assess the combination of a couple's income as if the two partners would always be income earners, whereas in 90 per cent of cases the wife will work for no longer than two years and the husband is again the sole breadwinner and his income only will have to pay the repayments. Why assess the combination of the two?

In conclusion I would ask the House to reject this Bill because of its complete disregard for our economy and the Irish people. A budget should be designed to help our economy to grow and to ensure that all sections of our community are being fairly treated. The Finance Bill now under discussion has all the hallmarks of being hastily put together with one aim in mind, that is, to pay off election promises. From the child at national school down to the old age pensioner this budget is a disaster.

Mrs. Glenn

It is with a degree of trepidation that I address this House for the first time. I do so mindful of my responsibility to represent the aspirations and the needs of the people who have sent me here. Having listened to a good lot of the debate I must confess that I am amazed at the gall of some of the speakers on the other side in their efforts to wash their hands of what can only be regarded as the irresponsibility of a Government that brought the country to the verge of bankruptcy. Their live-now, pay-later policy has put in jeopardy the future of the finest generation of young people that Ireland has ever had the good fortune to have.

The extent and size of our current deficit has resulted not only in corrective measures in the present restrictive Finance Bill, but it is also a statement of the inability of successive Governments to understand that the efficient use of money is our second greatest resource and that it determines how we, as a nation, treat and use our greatest resource, our people. We have unthinkingly squandered both these resources through maladministration, incompetence and through a narrow, selfish pursuit of votes. Successive Governments have failed, in most areas, to engage in comprehensive national planning so that an effective and efficient service infrastructure would be harnessed to the productive sector to create a sound and competitive economy which could absorb the energy and talent of a growing young population, which could provide them with housing at a mortgage level which would not enslave them for life, and so that we could develop a society which would be economically capable of being just and compassionate to its underprivileged and weaker groups such as the poor, the elderly, the handicapped and the mentally ill.

We have not learned, and the message of this Finance Bill is that we have no alternative but to learn, that we can no longer afford to spend and waste vast sums of money running incompetent, outdated and inefficient services when it would cost far less money to run modern and more efficient services. This is why, in a debate on a Finance Bill, it is quite relevant to examine the way in which we have wasted our resources in the area of housing, social welfare and health. If we are to stop wasting limited resources the message clearly is that we must be prepared to make the necessary capital investment which will enable us to obtain these modern, efficient and more economical services. The lesson is, as the Taoiseach said recently in Trinity College in a debate on the economy, "We must be prepared to spend money in order to save and make money." Let me now illustrate this misuse of our resources and the alternative pathway towards a more effective utilisation of our resources in certain areas of the health budget, particularly the psychiatric service.

When the Department of Health do not have a coherent and publicly available national policy for the development of a balanced health service, and you wish to know what their policy for the health service is, you can find the answer in the pattern of financial expenditure over a period of time. Indeed, irrespective of what policy is stated to be, policy is where the money is spent.

Examination of this area underlines the truth of everything I have said about our impoverished approach to economic planning and social development. The misuse of our resources in the health field is such that this year's allocation for health, £700 million, represents a figure equivalent to the total yield of taxes from the PAYE sector. This means we are using our resources in the health field in a wasteful manner. Nowhere is this better illustrated than in our attitude and approach to our psychiatric services. The key to understanding current expenditure on the health service is to examine the way in which capital moneys are used in health, because this represents the planning for the future. Over the past ten years there has been an enormous growth in expenditure on general hospitals each of which, on average, costs £25 million to build and as much again annually to pay for their running. Last year the Department announced a plan to build and upgrade 20 such general hospitals throughout the country at an estimated cost of £400 million. I do not for one moment criticise a plan to make adequate provision for general hospital services throughout the country. It, and the employment it generates, is to be welcomed. But it is counter-productive and politically immoral to do it in isolation as general hospitals do not represent the entire health service.

We can contrast this approach with the situation in psychiatry where, over the past ten years, the Department of Health have spent about £1 million each year patching up holes in roofs and damp walls in decrepit mental hospital institutions and also on TV programmes. Sorting out this service is not providing better clothes for the cinderella of the health service. It is more fundamental. It is a question of whether we will develop a competent service and in so doing save taxpayers' money.

There are between 12,000 and 13,000 people in our mental hospitals. This institutionally based service is one more legacy of the past which we have declined to face up to. Most patients are there for life. If we take a large mental hospital in Dublin with 900 beds, it costs over £10 million a year to run. This works out at about £½ million per long stay patient over a lifetime of expenditure. In this one Department there is need for an analysis of where taxpayers' money is being spent and I am trying to equate this with what is happening throughout the nation. We should contrast that cost with the fact that the cost of keeping 100 long stay patients in adequate group homes, hostels and rehabilitation workshops in the community is only one-tenth of that figure.

Every housewife is a Minister for Finance in her own right. We all know that it is vital that we get value for every pound we spend. The evidence of that is made public when department stores put up their sale signs. Housewives queue up to get the best value they can. There is waste of money in this Department. As a result of bad administration young people are shackled with the taxes we have to raise to meet the expenditure of this maladministration. I have touched on the money that could be saved if we were to treat long stay patients in a more humane way. Alternative community service is therapeutically more efficient and more suited to the needs of modern society. It costs less to run than the existing institutional service and is more economical. As it is capable of preventing people being institutionalised at a crippling human and economic cost and because it can rehabilitate people to a useful and economically productive life in the community, it is ultimately less of a burden on the taxpayer than the staggering £½ million per person per lifetime cost of institutionalisation.

I am aware that the time for this debate is running out and that my two colleagues are anxious to speak. In fairness to them and to allow them to speak on this I will try to be concise.

An Leas-Cheann Comhairle

I do not wish to interrupt the Deputy during her maiden speech and I notice the success with which she is overcoming her trepidation. On the other hand, I would advise that the matter of who would follow the Deputy is a decision for the Chair and there is no guarantee that her colleague, as she says, will be called.

Mrs. Glenn

I thank the Chair for informing me of that. I would not presume to dictate to the Chair. It was just a matter of female concern for others.

Mr. Flor Crowley

Motherly.

Mrs. Glenn

Over several years I have had an opportunity to observe the Department of Health and have been involved in everything relating to our health services. If the prudence of most women could have been given an opportunity, we might not have been looking for such vast sums of money. I heard the Minister being questioned about providing services. The money is not simply there to do this. Women have always spend the nation's money. Men have always entrusted their earnings to women to administer the home and family and even long term to buy a house. For that reason we have acquired an expertise. We know there is nothing wrong with having to borrow money if we spend it on something that is an asset, but very few women will borrow money to squander money. I ask Deputies opposite, who must know better than anyone else what the true situation is in relation to our finances, to join their expertise with people on this side of the House. I know there is party political banter but we are all here for the same thing — the common good of the people and particularly the good of the younger generation.

Arthur Griffith, one of the founder members of our party, always maintained that economic independence was a prerequisite to national independence. That has been brought home to us clearly. We know we are almost totally owned by the international banks in Amsterdam and New York. Our rights and independence have been too dearly bought to allow that to happen. We cannot let it happen. The Taoiseach and Minister for Finance had to take stern measures in the July budget. The consequences of not doing so would have been far greater on the people than any kind of hardship they would have to endure in the short term. Most people realise that.

I thank the Chair for the courtesy he has afforded me and I am very pleased to have completed that first hurdle.

An Leas-Cheann Comhairle

I congratulate the Deputy on her contribution but express regret that the magnanimity which she envisages does not always manifest itself in this austere House.

Mr. MacSharry

In the short time available to me I shall concentrate my remarks on the implications of the budget for the agricultural community. Much has been made of the so-called concessions in the Finance Bill so far as the farmers are concerned. These concessions are the VAT refund from 1 to 1½ per cent and the contractors VAT reduction. Taking into account the implications of the other items in the budget, these two changes are of no value whatever. There is no benefit to farmers in the VAT refund change because the VAT on most of their inputs has increased by 50 per cent and the inputs represent 60 per cent of the goods bought by the farmer. Regarding the other item — the contractors VAT reduction — there will be little if any benefit to the farmers because of the increased costs that the agricultural contractors must bear.

The Government failed to realise the situation regarding the farming community when they decided on such measures as the re-imposition of car tax and the increases in petrol and diesel prices as well as the increases in farm input prices. I doubt if there is anybody in the community who needs a car as much as it is needed by the farmer and by his wife. Consequently, the implications of the increased cost of motoring are enormous for them.

Another item in the budget, though not necessarily in the Finance Bill, was the cutback in finances for ACOT and An Foras Talúntais. More than any other time in the history of the State this was the wrong time to curtail the activities of either of these very important bodies.

The increase in sheep subsidies has been offset by the limits in the headage payments. That is a dangerous precedent especially in the context of the very serious incomes situation of the farming community. However, the most important aspect of the budget from the farming point of view has been the inflationary aspect of it. It is admitted by the Government that the measures taken in July will add 5 per cent to the annual rate of inflation. We all know that for every 1 per cent increase in inflation there is a reduction of £15 million in farm incomes. Therefore, the measures that have been taken by the Government are taking £75 million from the overall farm incomes for this year.

In the Farmers Journal of October 17 last, the prominent economist, Professor Sheehy had this to say:

Improved productivity in the form either of more output from the same inputs or the same output with reduced inputs would help in the current crisis. There is little doubt that farmers have been robbed of such productivity by the weather over the past three years.

Nobody mentioned the weather when I was responsible for agriculture. Professor Sheehy continued:

If weather had been normal this year, real incomes would be increasing instead of falling and some of the modest confidence in the industry in the spring would have persisted instead of the deep gloom which is prevalent.

At least we can see from that that the action we took restored farming confidence and led to a situation in which there was a prospect of an increase in farm incomes, but since the change of Government all of that has been reversed and the confidence that was there in the spring has now turned into gloom. What concerns the farming community more than anything else is not so much what the Government have done as what they intend doing in the January budget. According to themselves and to the economists the measures to be taken then will add another 4 to 5 per cent to the inflation rate. In other words, we are talking in terms of an additional 10 per cent in the inflation rate as a result of both the July budget and the budget to be introduced in January.

Having regard to the fact that a 1 per cent increase in inflation leads to a drop of £15 million in farm income, the Government by their actions have taken £150 million from farmer's incomes. This is from a Government who say that they recognise that inflation is a problem and accept that something must be done about it. It galls me to find commentators praising the Government for their anti-inflation programme. Where is there such a programme or what is it? I fail to understand the Minister for Agriculture or the Government in their approach to the farming crisis now being experienced. During the election campaign Fine Gael replied to an IFA questionaire about national economic policy and farm incomes by saying that the party accept that the farming income gap must be closed and should be restored to not less than 1978 levels in real terms with the least possible delay. However, after the election they had something else to say. At the agricultural show in Strokestown on September 4 the Minister for Agriculture said that, given the present situation in a section of the public finances, it was not open to the Government directly to compensate farmers for the drop in income that they had experienced in the past two-and-a-half years. He said that the cost of direct compensation was greatly in excess of any new expenditure which the Government were likely to be able to undertake.

After a meeting between the Minister for Agriculture, the Minister for Finance and the Taoiseach with representatives of the ICMSA, the IFA and Macra na Feirme it was stated in the communique issued that it was agreed that a serious decline in farm incomes had occurred in recent years and that farmers currently faced great difficulty in building up the volume of their production in the short-term. The statement went on to say that it was agreed also that attempts to solve the present difficulties would have to respect two priorities — the urgent need to reduce inflation and the maintenance of the principles of the common agricultural policy.

Further, the statement said that the Government had already indicated their proposals for meeting current difficulties but would be open to consider any additional suggestions which the farming organisations wished to make, and the delegations were invited to make such submissions. All that the Government have done, as far as anybody can see, since they took office, has been to bring about an increase in inflation although they recognised that they must reduce it. At the end of the communique they said that they had already indicated their proposals for meeting the current difficulties, but where or what are those proposals? All that their proposals have achieved has been to increase the costs for farmers and the increase in inflation has taken many £ millions out of farmers' incomes. They have failed to grasp the very serious situation that exists in agriculture at present which was brought about by themselves and by their actions. The Minister for Agriculture was quoted in one of the papers on 23 October last as calling for a cold-blooded economic approach to the farm income problems. Obviously the Minister is oblivious to the ruin to which Government policies based on that approach are drawing farmers. The Government's inflationary policies have removed the income improvement this year which Fianna Fáil put within the grasp of farm families and no improvement or relief is in sight. A Minister who calls for a cold-blooded economic approach at home will be in a very weak position when he goes to Brussels to fight the Irish farmers' case because if ever he had any cold-blooded economic approach at home he will find that in Brussels it is much colder and much more difficult.

I could say much more in relation to the statements made by the Government and by the Minister. I take exception to one of them in reference to ACOT, a farming body responsible for farm development, farm planning, advice and so on. The Minister had the audacity to attack the well-known and well-respected director of that organisation, Dr. Tom Walsh. It was a disgraceful attack. The doctor in charge of ACOT was only doing his job but, unfortunately, this Government —who themselves failed to recognise the serious situation—are now just turning around and accusing anybody who points out the facts to them. This is the position that faces us, and who has caused it? We have the very serious development of the farming community withholding payments from the ACC. While I do not condone that type of approach and neither would anyone on this side of the House, I can understand fully the frustration of the farming community at present, taking into account the various statements by the Government and the Minister that I have just referred to. I say to the farming community that there must be other ways and to the Government that they must seek with the farming community to find the other ways to correct this problem.

Last week in a statement here the Minister, talking about various measures and the interest subsidy from Brussels, stated, as recorded in the Official Report of 28 October 1981, column 722, volume 330:

It is not my contention—it would be idle to pretend otherwise—that these schemes will solve the credit problems being encountered by farmers. That is certainly not the case.

He goes on to talk about the substantial number of farmers who are in difficulty and says that he is working on a package of measures. If he is, he should be working in consultation and co-operation with the farming community and let them know what he is doing and what he and the Government intend to do either at home or on their behalf in Brussels. He must do this so that the farmers will not continue in the frustrated position they are in because of the very serious difficulties that arise at present within the agricultural community. These difficulties were there this time last year and we as a Government and I as Minister for Agriculture had to face them. We did face up to those difficulties and took measures to correct them and, as I said earlier, even independent economists were saying prior to the general election and the change of Government that we had halted the very serious decline in farm incomes, that we had restored confidence and for the first time in three years the farming community were facing the prospect of an increase in income rather than a decline. I will not delay the House but I will state that from August 1980 up to June this year, when the change of Government took place, the various measures, six in all, at home and abroad taken by me as Minister for Agriculture and by the Fianna Fáil Government amounted to a total of £400 million. That is the kind of money that will be needed now by this Government, wherever they find it, at home or abroad, to ensure that farming confidence is restored. There are many difficulties in the EEC.

I have not much time left. I will conclude by saying to the Minister and the Government, particularly the Minister for Finance, a farmer himself, that a cold-blooded economic situation cannot be imposed on the agricultural community at present. He as Minister and the Government will have to face up to the situation which exists now. They will have to meet the farmers and explain to them what they can and will do at home and abroad, and they must do it now, otherwise we are faced with a very serious situation in the farming community. I hope that that will not be allowed to develop.

An Leas-Cheann Comhairle

In accordance with the order, the final Fianna Fáil speaker has one hour commencing at 4.45 p.m. I indicate to the concluding speaker, presumably Deputy Reynolds, that he will speak until 5.45 p.m.

Dáil Éireann debate - Wednesday, 4 Nov 1981

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

An Leas Cheann Comhairle

Deputies

Mr. Crowley

Deputies

Dáil Éireann debate -
Wednesday, 4 Nov 1981