I want to preface my observations by reference to some of the remarks and observations made by the Minister for Trade, Commerce and Tourism. He went to great pains to point out that the speakers put forward on this side of the House were the lightweights of the Party. I want to assure him that no offence was taken in that respect, that that is his opinion and he is entitled to it. But if his theorising, postulating and over-stretched analysis of the insignificant points relating to our economy are the basis for sound planning under his Government then future prospects for the country under this administration do not look very bright. I should like the Minister to keep that in mind.
The debate in progress has been occasioned by what I can describe only as the frightening reality of economania, economic theorising gone mad; if you like, slightly flavoured by Brutonomics. It is an over-indulgent obsession with the intricacies of economic theory, this by a man, in the person of the present Taoiseach, who was regarded hitherto by some — with some justification at the time — as an able and respected economic analyst, as a statistician of high repute and as a caring and concerned public figure. During those halcyon days of the sixties and indeed of the traumatic seventies I never went out of my way to prove those people wrong. However, to my regret I must now admit freely that I played my part, perhaps by virtue of over-attention to a seeming personality, perhaps by over-attention to ability at theoretical postulation, in germinating the idea that one day this man would have an important contribution to make to the future of our economy. Unfortunately there was one vital element, perhaps the only element in this case, I unwittingly ignored and which I believe many other Deputies now on the Government side of the House ignored which contributed to our collective naivety, and that was the ability, or lack of it on the part of the Taoiseach to oversee and constructively manage the affairs of our economy.
Make no mistake about it, the mini-budget before this House — to which the Taoiseach hopes this Finance Bill will give statutory effect — is the Taoiseach's budget even though it might be slightly flavoured by his Brutonomics assistant. It is one founded on the false premise that if he, as the present Leader of this Government, was not seen to react strongly to what he described as the state of Government finances, our international creditors and the big bad boys of the International Monetary Fund would come running, waving their truncheons and batons to call in their loans and bring us all to heel. The Taoiseach's actions in this respect are reminiscent of a little school boy 20, 30, or 40 years ago who, having failed to do his homework, mitched from school for fear of the big, bad teacher. The scene would be hilarious were it not so serious.
The damage caused by the insensitive provisions of this Bill perhaps can be most appropriately captured by reference to a famous observation made in such a poignantly philosophical vein by Sir Walter Raleigh when, at his execution, rubbing his fingers along the blade of the axe about to terminate his life, he was overheard to remark, "This is the shock treatment that cures all ills." Of course, as we are all aware, poor old Sir Walter did not have to live with the consequences of that shock medicine. But for the economy and people of Ireland the consequences of this Bill are both immediate and long-term. At this juncture let the Taoiseach and his assistant set the record straight. Anybody with any knowledge of economic affairs must surely know that creditworthiness and rating — incidentally at this point I should say that the Minister for Trade, Commerce and Tourism was wise enough to acknowledge that we do have creditworthiness and a high credit rating even now — either domestically or internationally have confidence, and I stress the word confidence, as one of their key elements. Yet, by one fell stroke, this administration have done far more to engender lack of confidence in the ability and potential of this economy amongst our domestic and international creditors than ever before in the history of this State.
I want to take this opportunity to sympathise with some of the personnel in the media in their present dilemma. They created and fuelled a stature for the present Taoiseach akin to that of a mandarin or perhaps a semi-god who would, if given half a chance, hand down his manna to the people of Ireland in the form of an economic panacea. To the ladies and gentlemen of the media I would say, there will be many mouths hungry and many tables lean this Christmas. To many Deputies on the Government side, indeed to some Ministers, I would say that they also have my sympathy in their dilemma which is even greater. They know that in their Leader they have a man who has no mandate whatsoever to twist their most reluctant arms to implement his hare-brained schemes, completely divorced from reality and the logistics of which are applicable to the realms of theoretical and intellectual postulation only.
For the Tánaiste I have a special message and I also want to remind him of a very astute observation he made to some of his socialist friends, intended for the ordinary people of Ireland, some time ago regarding some of the then Fianna Fáil Ministers when he said, "By the tracks of their Mercedes shall ye know them". Let me hasten to remind the Tánaiste that the tracks of his Mercedes will have left many an indelible scar on the larders and minds of the plain people of Ireland before this winter is over. Those ordinary people, whose wages are meagre enough, who go about their daily business with an ever-conscious sense of frugality, find themselves now in a hopeless and frightening dilemma. As a result of Government action they must now endeavour to live with a 5 per cent increase in the rate of inflation, which percentage, as we all well know, does not take into account the total multiplier effects of such impositions.
This Government came into office on the basis of an anti-inflation programme, fully aware of the then level and state of Government finances. The then Leader of Fine Gael, now the Taoiseach, was credited with many statements of calculation, mentioning a balance of payments deficit of over 14 per cent of gross national product. Against that background he was highly critical of the level of inflation that had obtained under Fianna Fáil whilst at the same time promising to embark on a programme which would have the immediate effect of lowering the general level of price increases. Yet, without batting an eye, he immediately imposed an increase in value-added tax of 5 per cent, hitting hard almost every aspect of social life in the country. At best, all one can say is that he and his Government have been totally dishonest. But the seriousness of the situation for the poor and unemployed is such as to make present policies criminal in the extreme. Imagine the arrogance of any Government in these inflationary times offering an increase of 5 per cent to long-term social welfare recipients and 3 per cent to those on short-term benefits. Those increases hardly represent the price of an additional bottle of milk per week but, in real terms and when set against Government-imposed inflation represent a net loss. This is a terrible indictment of a Government who had professed to be caring and concerned. The recent increases granted to the ESB, of the order of 20 per cent, a company whose accounting methods are the centre of dispute anyway, and who showed a profit of more than £6 million last year, were unnecessary and unjustified.
Even at the best of times the plight of the poor, the disabled and the unemployed in Ireland is a severe one, and to say that indexation of their allowances to the cost of living increases is adequate is to condemn to further deprivation and degradation those who have served their country so well all their lives and those who through misfortune or economic circumstances do not have the opportunity to make such a contribution. Because of their plight, physically, materially and psychologically, any increase granted to them should always represent a real net gain. Developments in national pay agreements in recent years have taken serious cognisance of this need, because of the growing awareness that to ignore the weakest in our society is not only grossly unfair but evil and damaging to society as a whole. On the one hand it promotes the greed principle and on the other it serves to promote the view in industrial relations that might is right.
Recognising these rights, the Fianna Fáil Government in their spring 1981 budget granted an increase of 25 per cent on these allowances and in the Social Welfare Bill before Christmas last year the then Minister granted a double week allowance to long-term recipients. When you compare the Bill now before us with those provisions, and when you recall the loud voices of the Labour Party and of Mr. John Carroll of trades union fame at that time you must ask where are those voices now: is it simply a case of the 30 pieces of silver having done a fine efficient job?
When we take a serious look at the main thrust of Government economic policy as initiated in this Bill we find a muddle of conflicting targets and a profusion of inconsistencies in their overall application. The increases in VAT will increase the factor costs of production and inevitably seriously erode the competitiveness of our products on the domestic and international markets. The implications here are enormous. Our terms of trade will decline rapidly and our balance of trade will be seriously affected.
In this regard I refer to a speech by the Taoiseach to Trinity College's Philosophical Society on Wednesday of last week. When expressing concern for the loss of competitiveness of our goods and services, he laid the blame simply and solely on the ground that our pay rates had risen faster than those of our competitors. Anybody with the slightest grasp or understanding of factor costs knows that wages, although significant, represent only one such factor, and for the Taoiseach to make such a statement is a gross over-simplification. It means, at least, that he has no direct responsibility in the area of competitiveness. It was a refusal by him to take account of the implications of this Bill in that area. It was also an attempt to incriminate the workers in order to deflect attention from the ramifications of the budget.
During the course of the same speech, the Taoiseach stated that the wholesale price index, which measures increases in the cost of goods leaving the factory gates, has been slowing down. That would suggest the dawning of a more favourable pattern in our competitiveness and must surely be at odds with his earlier reasoning. What he did not acknowledge is that there is always a time lag involved before the effects of any policy can be gauged, so the latter reference of the Taoiseach is a reflection of favourable trends emanating from the former Government's policies, and the former reference was on the basis of anticipating a reversal of that favourable trend because of his policies in this Bill.
At this stage I will examine a very fundamental point in regard to our imports. This country has a very high import content, and the price elasticity of demand is very weak and sometimes negligible. A very high proportion of the raw materials for our manufacturing industry has to be imported, and this is the area which is acknowledged by all economists as the main springboard of employment creation in the private sector. It is the area on which tens of thousands of our young people leaving school annually will be dependent and to which thousands of other workers already facing the grim prospect of being thrust on the dole queues will be looking for alternative employment. Yet the Bill before us does not do anything to enhance the prospects in this area. Indeed the conditions produced by the provisions of the Bill are already creating a serious disincentive to investment plans. Deputies on all sides must be aware, from daily media references, of the effects being felt across the whole spectrum of industry. There has been a definite toning down and a shelving of investment decisions, plus threats and rumours of closures, with increasing regularity.
There is the case of B & I with their threat to trim down their operations and manpower. In view of present conditions and distincentives, the unions within B & I in the past week told me that they are inclined to agree with the decision of the company because they do not see any long-term prospects under the present administration. Aer Lingus are in trouble, and in the past week or two we have had the ACC telling farmers, despite the serious difficulties they are experiencing, that if they do not come up with the readies immediately, readies which most farmers do not have, the ACC will consider closing their doors.
Then, we have the Minister for Agriculture telling the farmers that all he is doing is talking. In the course of a radio interview yesterday, when he was asked what he intended to do, what decisions he and the Department intended to make, he said he was in consultation with the banks and that he did not want to pre-empt any decisions that might arise from the consultations. I say that is not good enough, particularly when jobs in agriculture are already being threatened, when farmers are already on the way to the dole queues, on the way to selling farms and leaving agriculture. This is contrary to promises made by the Coalition in regard to agriculture.
The building industry, from which emanates one of the greatest multipliers of any form of investment, is already showing signs of a dangerous depression. When you superimpose on that background the present embargo on recruitment to the public service, the huge reduction of intake to teacher training — I will be dealing later with the budget provisions for education — what is there by way of employment prospects for the decades ahead?
The Government have offered us a Youth Employment Agency. Why not bolster and assist existing structures? Deputy Sherlock referred to manpower and the need to extend courses and flesh out and further develop services in that area. Other Deputies made reference to the youth employment schemes brought in by our Government in the past. These should be developed and additional allocations made to them. I have no objections to the creation of a youth employment agency provided it is not just one big smokescreen and another white elephant. With 50 per cent of the population under 25 years of age and an increasing number of young people coming on to the labour market, job creation for this age group is vital. I hope the creation of new structures and new bureaucracies will have the desired effects.
The sincerity of the Government's intentions in terms of commitment to employment creation must be seriously in doubt. Any new creations in this area, while neglecting existing ones, are merely smokescreens to divert people's attention from a ruthless, insensitive and blind monetarist pursuit. The Minister was fascinated that people were bandying about the word "monetarist". I assure him that my view of monetarist is contrary to the fiscal policy. A fiscal policy sees the necessity for Government intervention to help along the economy in bad times. This Government have chosen to pull in the reins on money. In so doing they justifiably deserve the label "monetarist".
Arising out of all this it now seems more popular and profitable to tell a redundant worker with all his acquired skills or a young graduate of college or school with State and parental investment of thousands of pounds, to head directly for his nearest labour exchange with all the indignity it confers rather than give him an opportunity to reinvest his talents, skills and experience to the benefit of his own dignity and of the economic and social well-being of the community. There are Deputies on the Government benches trying beleaguredly to justify the measures before us in terms of the fulfilment of Fine Gael election promises. I have heard at least one Deputy say that the pledge of £9.60 to a housewife represented the first step towards recognising the role and contribution of women in the home. Is it out of naivety or out of a deliberate, if rather weak, attempt to mislead that such Deputies would have us believe that such a measure makes one iota of a positive and real contribution in the way suggested? For one thing, as every housewife knows, a rapidly increasing proportion of her weekly shopping basket is made up of non-food items so that the real gains to her will have been eaten up completely by way of price increases before ever she begins to receive such an allowance. If the measure is designed for the stay-at-home wives whose husbands are reluctant to part with adequate household allowances, then all these husbands have to do in the future is to decrease their contribution to the household by the equivalent amount. Indeed, arising out of the levy being imposed on them, some will feel justified in adopting such an attitude.
It is clear that these are only some of the problems related to this aspect. The sending out of upwards of 300,000 cheques of £9.60 a week, which will make no household better off, will bring a new administrative structure into being with extra staff requirements and in its wake will come a flood of applications to be processed from other housewives claiming their eligibility. Inevitably it is a recipe for division and resentment between the haves and the have nots. Another one of those spurious cases put forward in justification of the monetarist nature of this Bill is that it permits the Government to follow through on a reckless vote-catching gimmick of immediate tax reform. Everybody agrees that reform in the PAYE sector is a priority since this sector carries over 86 per cent of the burden of revenue from direct taxation. Yet the implementation of this entire promise immediately will necessitate increases in indirect taxation in next January's budget to the tune of £400 million and all in the interest of this illusory thing they call "discretionary income".
I regret the day economists ever coined the term because it is giving fuel to the present administration to con the people in the short-term. The effects of this measure on inflation, industry, employment and the quality of social life generally will be astronomical. There was some ray of hope for reason in this area with the first public pronouncement made by the Tánaiste regarding the folly of transferring the entire burden immediately but, regrettably, with the first crack on the knuckles from above, he was not long about retiring to silent submission. The Taoiseach and his Government should know only too well that what they are putting forward flies in the face of advice from every respected economic authority, authorities whose advice they so feverishly clung to in the past.
To say this package adds to inflation is to understate the facts particularly when one takes into account the effects it will have on industrial relations and wage claims in both the public and private sectors. Yet the Government seem to have thrown in the towel on the advice of the three wise owls regarding the promotion of a new national understanding. We saw the attitude of the Taoiseach when he was asked by Deputies O'Donoghue and Haughey yesterday what he was prepared to offer to both sides that might entice them to go forward with further arbitration. He had nothing to say except that what was put forward already was meaningful and negotiable. The Government's refusal to make any determined effort to secure agreement can best be described as a deliberate act of irresponsible brinkmanship. Already the big guns of the trade union movement are lining up to fire demand volleys in excess of 25 per cent. Engineering workers, maintenance craftsmen, senior civil servants and many others who, in the recent past have shown their bargaining muscle, are already gearing themselves to claim what they regard as just compensation for erosion of real earnings by virtue of this Bill. Those hardest hit in this free for all melee will be the lower paid and those employed in the vulnerable footwear and textile industries.
In one respect this Government are consistent. The strategy is the same irrespective of qualitative or quantitative differences in the factors or areas affected. The Finance Bill wantonly condemns the poor and under-privileged to a daunting winter of want. The implicit discouragement of a national understanding adds insult to injury. It is a kick in the teeth to those least able to fight back.
Last, but by no means least, I want to deliberate briefly on an aspect of this Bill and what it subsequently spawned in the area of educational provision. In so doing I do not want to pre-empt or prejudice anything that might be said this evening in this area. Far from making a positive contribution to the progress of the previous administration with regard to education needs, the increase of 5 per cent VAT on the price of school books represents a savage and derisory response to the genuine difficulties being experienced by thousands of parents trying to meet the astronomical costs of books at present. I have reason to believe that sitting on the desk of the Minister for Education is a pile of petitions from principals of secondary schools on behalf of pupils whose parents are simply unable to pay. I have a copy of one such submission that was made to the Minister for Education on behalf of no fewer than 69 pupils in one school. If that is any reflection of the national pattern—and I have good reason, from talking to various principals, to believe that it is—it is a clear indication of the reduction in educational estimates.
The raising of the school entry age for reasons only of financial logistics with the consequent loss or redeployment of 920 jobs in the next two years, coupled with the reduction of 180 in student intake in the teacher training colleges, leaves no one in any doubt about what this administration think of the educational needs of our children. To enable them to prepare to honour their irresponsible election pledges the Government through the provisions of this Bill have condemned 17,000 children to a year without education while at the same time telling about half that number either to make their first trudge to school in the winter months or to forfeit a further six months education. Surely this reflects a cruel, vicious and insensitive attitude. On Sunday last in the course of a radio interview the Minister said that he and the Government must consider all cases sympathetically. Where does his sympathy lie?
This Bill will best be remembered as the one that extinguished 920 existing teaching posts in two years and, arising out of the inevitably large panel created, will block the employment prospects of newly-qualified teachers in 1982 and 1983 thereby leading to widespread unemployment. Never before in the history of the State has the educational base been so narrowed out of necessity for financial provisions. Never before have such stringent measures been taken without due consultation with the experts and the interested parties involved on the ground. I am not too surprised in this regard because, apart from the very justified criticism that has been levelled at the Department of Finance arising out of this Bill, the people should know that the Minister for Education in an interview with the educational journal Listening and Learning admitted that he had never read a book on the theory of education. When asked whether he thought that Illich or any of the other debated theoreticians in this area was applicable or practical in an educational situation, he replied that he had had a corneal graft last Christmas and did not have an opportunity to check on those books, that he did not consult them before beginning to put forward his policies. I resent this kind of cavalier attitude and approach towards his ministry. As a teacher I take this opportunity of saying to him and to the people generally that on behalf of all the teachers he should either seek sound advice immediately or get out.
It is said that practice without theory is blind, just as theory without practice is sterile. If the man who coined that phrase did not have the originators of the present policies in mind he certainly was thinking of somebody closely resembling them. There is an over-weening preoccupation with financial logistics which takes no account of the educational, social, employment and economic needs of the community. The monetarist policies embarked on by this Government, and to which this Finance Bill gives a clear and unequivocal push, have both immediate and long-term damaging affects. The plural aims of low inflation, reduction in unemployment and the sharp pruning of deficit budgeting so glowingly enunciated against a background of serious recession are clearly in conflict with each other. The Taoiseach, in an attempt to get himself and his Government off the hook, must resort to stirring controversy and to deflecting attention elsewhere. The people will not be that easily duped and they will not forget.
