I cannot say that in this Supplementary Estimate the Minister is providing sufficient money to satisfy all the needs of the west, or any part of it, but I recognise that the Government took over in the middle of the year and that they found that requirements were underestimated for the year ahead. The Minister did not have much option but to raise the necessary finance to fill the gaps that existed in the policies already in operation. He succeeded in adding a little for the most urgent needs of the agricultural community. I hope that in the forthcoming budget an effort will be made to relate spending to a policy which will help to encourage production and restore farm incomes to a decent relationship with the incomes of other people. I hope that by the same means more jobs will be created and our balance of payments improved.
In relation to the point made by the last speaker about the western drainage scheme and a reduction of £6 million, it is important that we understand what all this is about. Under the farm modernisation scheme grants were made available for drainage which was part of a farm plan prepared by a farmer. The grant amounted to 50 per cent of the actual cost without any limit on the amount of money a farmer might invest in the reclaiming of an acre. The western drainage scheme grant, amounting to 50 per cent of the cost, was subsidised by 10 per cent from Brussels. That grant was increased to 75 per cent and the Fianna Fáil Government reduced their commitment and investment in drainage in the west. They attached to this a limit and a fixed costing which were not updated or upgraded. We were supposed, on paper, to have been getting a 70 per cent grant towards the improvement of land under the western drainage scheme but, in fact, we are getting considerably less than 50 per cent. That is the sort of dishonesty we have become accustomed to when people do not understand what this is all about.
The truth is that the grant under that scheme was reduced and that since the Government took office no reduction has taken place. There was not a reduction, as a result of the Supplementary Estimate, in the amount of the grant available to individual farmers. For eight months before the former Minister left office his officials had left on his desk more realistic costings on drainage in the west but he went through his budget and prepared his Estimate ignoring those realistic costings. If we could see those costings I believe we would learn that they are not nearly as generous as the money provided to people involved in industrial development with the IDA and other sections. I would love to see them compared with the costings county councils or the Office of Public Works would prepare if they were to carry out similar work. However, they represent improved costings, but the Minister ignored them and continued to give farmers something like 50 per cent of the amount the scheme states farmers are entitled to. That Government ignored completely the cost increases and the difficulties experienced in the agricultural sector in the west.
I admit that the last Minister, like any other Minister, had problems and we should face up to that situation. We should try to relate our remarks to reality and put forward honest appraisals of the problems and who created them. I am not trying to blame the former Minister for all the problems of farmers. But, having failed to solve them, having presided over them getting steadily worse, he should have come to the House in humility about his failure and tried to be honest and constructive with the person who has responsibility for doing the job at present. It was an extraordinary performance for a person who should know all the red herrings, the references to unimportant things and trying to make £5 million or £6 million into something of major significance to the agricultural industry.
One thing that intrigues me when I look at this Supplementary Estimate, and the Estimate for the Department of Agriculture, is with all the schemes we have why the situation is as bad as it is? At one time I used to understand most of them but in recent years it would take a computer to store all the details relating to all the little schemes that have been created mainly in response to political situations and in an effort to shut somebody's mouth for the time being. They were introduced in the full knowledge that the problem would not be solved. I believe we could compress the activities of the Department into a narrower field and that that would have a greater effect.
I do not believe that this proliferation of mickey mouse schemes for the west and for the various sectors is solving the problem. In fact those schemes are leading to a wasteful use in administration of important resources. I can see that happening annually. I see more agricultural officers, more cars on the road and more people visiting farmers, but I see incomes steadily dropping. I do not say that those people visiting farmers are the cause of a drop in income but they are not improving the situation. We should re-appraise our attitude to the development of agriculture.
I noticed in the original Estimate that development farmers will get something in the region of 15 per cent of the total Estimate of the Department in direct aids towards increasing production. I have not the exact figure but I am sure that if one examined it one would find that those are the farmers, together with the small number of commercial farmers we have, who produce a considerable proportion of our total agricultural output, far in excess of their percentage as a proportion of the total number of farmers. Yet only 15 per cent of the total budget finds its way into their hands to encourage them to develop further. I agree that the classification of development farmers is incorrect and that that category should be considerably wider than it is at present in the entire farming sector. Nevertheless we must recognise that until such time as a higher percentage of the total money spent reaches their pockets for development we will not achieve the sort of increase in the rate of agricultural growth we should.
I have discovered also that more than 30 per cent of the total money is being spent on the payment of wages in the Department of Agriculture. Most of that is incurred on administration. It does not include the advisory services whose work we must recognise to be considerably more productive and related to increased production than that of the average agricultural officer. I do not propose that we could get rid of all of them overnight. All of us to whom the Minister will listen should be telling him to reduce those excessive administrative costs, thereby ensuring that the money provided finds its way in the form of some type of incentive to farmers. I agree that a distinction should be drawn between the supplementary income and the incentive, but the one should be more the concern of the Department of Agriculture and the other more a social cost which we should be prepared to bear and must bear in present circumstances.
There are a number of things one would like to say about the grants, not only those for western drainage but also those paid for farm development. I would ask the Minister to seriously consider an urgent review of their costings. If those costings were to be calculated by the people who undertake costings for the Industrial Development Authority or some of the other semi-State bodies, they would discover that what the farmers are receiving constitutes a mere 7 per cent or 8 per cent of their total development costs.
There is provision also in this Supplementary Estimate for the protection of borrowing institutions against Euro-loans. The Minister and all concerned should examine this situation very carefully. It amounts to a small amount of money — I think, £800,000. The Minister should examine that carefully and ask those financial institutions what they did with their profits on the loans they borrowed at 7 per cent and 8 per cent and passed on to farmers at 16 per cent and 17 per cent. That situation need never have arisen. I recall three years ago speaking in the Seanad on this subject when I pointed out to the then Minister that, having joined the European Monetary System, we had tied ourselves to the staple currencies of the EEC. We had committed ourselves to not having any serious divergence in the value of our currencies.
What we forgot is that we must exercise a sort of discipline in our economy to ensure that our currency would maintain a realistic value within those bands. Indeed, whether or not our currency has a realistic value is very much open to question as a result of the different performance of our economy from those of the currencies with which we were supposed to retain parity. In the 18 months following our joining the European Monetary System we found that average interest rates being paid by farmers on the Continent were of the order of 6 per cent to 7 per cent. Those are not subsidised incomes because they represent mostly the interest subsidy rather than the direct grant payment. But farmers were borrowing at 2 per cent and 3 per cent interest when they availed of the subsidies that were going. Banks were lending money freely in large amounts at 6 per cent to 7 per cent. Even though we joined the European Monetary System we followed British interest rates. While we had to sell on the same market as our European partners Irish farmers were paying 18 per cent, and some in excess of that figure.
I could never understand why an Irish Government accepted a situation in which, while we were part of the European Monetary System, our farmers were forced to pay those interest rates — and indeed industry as well — while our partners in Europe had money available to them so much cheaper. I raised this with the Minister from the Government side of the Seanad at that time. I received full support. I was told by Senators, who are now no longer Members, that they agreed absolutely and that they could not understand why our Government would not encourage our financial institutions to lend. Because of the common agricultural policy, even had we had a devaluation of the pound we would certainly not have lost the equivalent amount of money because agricultural prices, since they are fixed in units of account, would not have dropped automatically. In fact they would have increased and we would have had an absolute, in-built, automatic protection against devaluation.
The Government at that time were directly responsible. I recognise that nothing can be done about it now because European interest rates have been forced upwards by the dollar. But over a long period the banks quietly borrowed money in Europe at the right rate and openly passed it on to farmers and other investors at a very high profit. Therefore I wonder about the wisdom of the Minister including that type of protection. I recognise that at the time perhaps he was forced into it by powerful institutions who do not always make it known to the public what is their real position or how they transact their deals while producing accounts giving what they want people to believe is their actual position. The full implications of the things they do are difficult to understand on the part of the public generally. It is very difficult to understand why Irish farmers were forced to borrow money in those years at 18 per cent when it was freely available at 6½ per cent and 7 per cent and when devaluation constituted absolutely no risk.
It is difficult to hear ex-Ministers on the other side of the House weep about the situation, to hear Deputy Mac Sharry, who was the Minister responsible at the time, cry about the situation for the past six months, the damage done by the 3 per cent inflation which he magnified to 5 per cent, and which he contended was probably brought about by the introduction of this Supplementary Estimate. This was not something done at the will of the Government but rather because they had no choice. Nevertheless one would find it difficult to understand that he was Minister for Agriculture in a period when the inflation rate was allowed to diverge from the average European rate by as much as 10 per cent. If Deputy MacSharry believes the figures he gave — that every 1 per cent takes £15 million out of the pockets of farmers — then let him calculate what it cost Irish farmers to have a Fianna Fáil Government in office for the past four years. His figure is probably exaggerated. If it were not, we would be building workhouses and hospitals for farmers who would have no income at all in the present year. The situation is bad enough, but Deputy MacSharry must expect the people on this side of the House and the public generally to have an extraordinarily short memory.
Deputy MacSharry weeps also about the situation in the west. I am not saying I have all the answers, but again the former Minister presided over a situation in which the number of sheep on the land in the west, on which he says the farmers of the west depend so much, the number of cattle — the number of suckling cows has dropped by 10 per cent — the number of dry stock, every single item of stock on which the western farmer depends for a living was reduced in number in the two years Deputy MacSharry was in office and in the four years the Fianna Fáil Government were in office. I would like them to recall that this is the situation that they have brought about. Farmers' incomes have dropped by 50 per cent in two years. I am not saying they could have solved the problem, but let them be honest enough to say that the policies that were in existence have been a failure. All their mickey mouse solutions were designed to blind people for the time being with a few pounds for the making of silage and a couple of pounds for crushed limestone. They are only mickey mouse solutions to a problem which is so big that to solve it will require the full co-operation of everybody in this House, the full co-operation of the farming organisations and the Government and a sensible and constructive approach by whoever happens to be in opposition at the time.
Let us not tell the farmers of the west that they are entitled to this, that and the other and that because they are entitled to it they will have to get it, because we know that the taxpayers have no intention of providing the sort of money that we need at this moment to give the farmers in the west the standard of living they need if they are to live in any sort of peace and dignity. We know that the taxpayers are not prepared to do it. That is the sad situation. So let us take the Estimate that is provided and let us ask ourselves how we can take that money and convert it into some sort of vehicle which will lead the farmer to increased production and improvement so that they can bring our young people into employment and improve our balance of payments and all the other things that increased production can do. We have to take a basic look at the whole question of how we are spending this money. What we have got is patch upon patch, introduced one after another in response to the political need of the moment and the need to pacify people before the next election. That will not solve the problem.
We cannot force these people off the land because there are no jobs for them and no prospect of emigration open to them. So we have to design our budget properly. When we joined the EEC the total amount of our budget spent on agriculture was about 14 per cent of our public spending. Today it has gone down to 4 per cent. What did we do? We joined the EEC. We were relieved of the necessity to spend so much money. Our food subsidies were paid for. Incidentally, I do not agree with food subsidies being part of an agricultural Estimate; they are a social consideration and we should redesign this. We complained about it in Europe and we also complained about the situation with regard to food aid. Before I became a Member of this House I noticed that this aid was included in the agricultural Estimates of this House, and it should not be. But we saved an amount of money on food subsidies and on export subsidies. We were able to give our farmers an improved standard of living. But what we did was to transfer a proportion of our budget and our spending into other areas. If we had not joined the EEC and if we had not been relieved of the need to subsidise our agriculture, we would have found that we could not spend as much money today on education as we do. We would not have as advanced a system of social welfare as we have, and it is not very advanced. We would have had serious cutbacks in other areas. We must recognise that through our involvement in the EEC we have been enabled to transfer this spending from agriculture to other areas. But my belief is that we should not have transferred it. If at that time we had taken the money that was saved, the £300 or £400 million that we got when we joined the EEC and had devoted that money to the development of agriculture, to the training of young people in agriculture, which is so important and so neglected, we would not be importing £700 million worth of food this year and we would not have so many young people seeking jobs. We would not have the cost squeeze on our co-operatives and we could have expected to have an increase in agricultural production and developed and borrowed and spent accordingly. But we did not do that and have now found that we have a decrease in agricultural production. We could have avoided that situation.
But at this stage let us ask ourselves what we should do. Let us cease to blame each other for what has happened in the past five to ten years. Let us prepare a plan, in so far as we can, through the use of the budgetary facilities of this House. Let us, for a year or two until agriculture gets out of this mess, raise as much money as we can and invest it to encourage the maximum possible production.
In the area of agriculture, let us divide the social needs of individuals who happen to be in a difficult position from our desire to increase agricultural production. Let us recognise that of this 130,000 people living on the land quite a number of them are not actually farmers. Quite a number of them can never be made viable. But if they can get some part of their living from the land, let us introduce some sort of income supplements which will solve their problem. Let us take our agricultural budget and invest and spend that money so that we will encourage an increase in production from the farmers we know can do it, the ones with the training, the skills and sufficient acreage of land. I do not accept that the budget is being used to do that. In the years ahead we should all realistically reappraise the manner in which we are spending this money.
We have a difficult situation in the west. They have disastrously low incomes. If cattle prices improve by £2 or £3 a hundredweight farmers quickly forget what happened last year. That is the nature of farmers. It is not really their weakness; it is their strength. That is what has kept them there through the generations. The resilience is in the farmers of Ireland. That is a good thing. I recognise that if there is a good morning and a good mart they forget what happened. But the truth is that they have been living below subsistence level for the last two or three years. The headage scheme was not well conceived in the first place. But in this year, by increasing our payments to the maximum allowable by the EEC, we can give the farmers in the west, in the severely handicapped areas, a further £30 million. We can do that and we will only have to raise £15 million from our own resources here. If I were asking the Minister or the Government to raise £15 million to give to those people I might not do it. But because I am asking him to raise £15 million to spend £30 million, because I know he will get £15 million from the Community which we will not have to bargain for, it would be the wise thing to do at this time. In this year it should be done.
I know where some of this money will go. Perhaps about one-third of it will go into the hands of elderly people who may have a little savings and who might put it in the bank; one-third will go towards giving farmers and their families the minimum standard of living they can expect and are entitled to; at least one-third of it will be spent in the purchase of livestock in the development of the farm and farm yard. Almost all the money put up by the State will be re-invested and will justify this action in the years to come. I know it is a difficult situation. I recognise and sympathise with the difficulties of the Minister who came into office to discover that his predecessor either failed to estimate or had not the courage to face up to the cost of administering his Department in the years ahead. I know that in those circumstances it is difficult for a Minister to do all the things he would like to do because he must finance the things to which he was already committed before he came into office. I have considerable sympathy for him. If it were the start of a new year with the introduction of a new budget I might perhaps be a bit more critical.
On the question of disease eradication, the performance of the Department of Agriculture and the veterinary surgeons and everybody involved has been most disappointing. On the situation of serious unjustified breakdowns the actual testing being carried out requires thorough investigation by the Department of Agriculture. I do not wish to blame anyone for what has happened, but the agricultural industry has been paying the price of getting rid of reactors because the Government have not been paying it. Farmers get only a small subsidy towards the cost of eliminating reactors from their herds. Anyone who suffered a serious breakdown in the past year was forced to sell reactor livestock, particularly if it was a dairy herd. That farmer, if he had borrowed, would be in dire straits, regardless of his experience, skill and efforts. If everyone had been doing the job as it should have been done, we would not have the present situation.
I congratulate the Minister on his appointment. I have observed his contributions in this House and in public before he took up this responsible post. I am absolutely confident that he will ensure that the money is spent in the best way possible and that there is no shilling in this Supplementary Estimate that could have been avoided.