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Dáil Éireann debate -
Thursday, 29 Apr 1982

Vol. 333 No. 9

Financial Resolutions, 1982. - Financial Resolution No. 6: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance.)

Deputy Molony is in possession and he has 59 minutes left.

In many ways this was a unique budget. I do not think any Member of the House should forget that this is the fifth successive budget introduced by the fifth different Minister for Finance. During those five budgets we have had three Governments. If one examines the philosophy, if one can so describe it, of those budgets one finds they are quite different and none of them succeeded in any way in tackling the fundamental problems besetting our economy. The one thing that must be said about this budget, the March budget of this year, is that it was a budget of lost opportunity.

It was an unique budget in more than one sense because it was brought about because of Deputy Bruton's defeated budget in January and it came about as a result of a general election result which changed the Government. I believe that the political and financial cost of the general election held in February would have been well justified if the budget introduced by Deputy MacSharry, Minister for Finance, had been different. The changes that were made were largely superficial and I shall discuss the effect of those changes on the January budget. I wish to remind the Minister for Finance and other Deputies that they cannot claim from the election result to have obtained a mandate from the electorate to act as they have acted in bringing in their budget and particularly to act as they have acted ever since.

I shall not claim that Fine Gael had a moral victory in the recent election but it is important that Deputies, particularly Fianna Fáil Deputies, bear in mind that the Fine Gael Party increased their vote in the election and achieved the greatest vote they ever achieved in the history of the State. That was an extraordinary occurrence given that the January budget was the most difficult budget ever introduced. In fact when the election campaign was fought on that budget the electorate responded to the leadership they had received from the Coalition Government over the seven or eight months they were in office and were prepared to follow that leadership. Indeed in the days immediately after the January budget Fianna Fáil initially reacted quite differently from the way the electorate would have found acceptable. Having canvassed a few houses they read the signs reasonably well. They changed their tack and Deputy O'Donoghue who had recently been brought back as Fianna Fáil spokesman on Finance recognised that financial rectitude had become popular. It was ironic that he should come back into that position because he was probably the one person who could easily be identified with the man who made financial rectitude unpopular in 1977 and in the years immediately following.

The result of the election shows that the electorate wanted to see our economic problems dealt with. I think everybody who canvassed door to door in the election would readily admit that it was on everybody's tongue that our borrowing, particularly our foreign borrowing was a disgrace, that the benefits we were to achieve from the foreign borrowing were not there to be seen and that people were very dissatisfied and very concerned and fearful of what would happen in the future. When Deputy MacSharry introduced his budget he gave the appearance of concern and caution and indeed was not to dismiss the necessity for financial rectitude. He got his budget through the House and for a few weeks afterwards seemed to be satisfied it would remain that way, that things seemed to be all right. This was before the PRSI issue erupted and before Independent Members who had found it a "well-balanced and fair budget" decided to change their minds about it. When people began to examine the budget it was seen that all was not as clear as it seemed to be and the PRSI revolt occurred and protest marches were threatened and Independent Deputies were coming on radio and television saying that they were not satisfied, that they did not really understand it when it went throught in the budget and that they wanted to change their position.

Even then for a few days the Minister for Finance stuck his heels in and said that there would not be any change; that perhaps there might be a change when he received the report from the Commission on Taxation but certainly not before then. That was the position he adopted. Then, lo and behold, the Irish Congress of Trade Unions meet the Taoiseach and a new tax allowance costing the country £45 million is announced to pay for alterations the intention of which would be to reduce for people on high incomes the PRSI contribution they must pay.

It is no surprise that every national newspaper described almost with incredulity the Government's climb-down. One newspaper said it was not a climb-down, that it was a total collapse. Editorials spoke of the fact that the Government were not able to govern, that they were running from crisis to crisis and in one newspaper article, published I think last Sunday, they used the phrase which I rather like, that "good time Charlie" was back. I think that is really what it is all about.

The very sad thing about the budget is that the effort which was made during the previous eight months has been lost. Public opinion was mobilised and the electorate were willingly prepared to suffer sacrifices. They recognised that we had economic problems, they wanted to see them resolved and they were prepared to make the necessary sacrifices. They wanted to see a Government that were prepared to say to them: "This is not nice, it is difficult but it is necessary, it is in the national interest and must be done". Provided the Irish electorate are satisfied that whatever Government are in power, a Fianna Fáil Government or a Coalition Government, will conduct themselves like that, they are prepared to say they are happy with the Government.

The results of the election prove this point. The Fine Gael Party actually increased their vote. I am not claiming any moral victory nor am I making anything out of it like the Taoiseach did when he complained about losing the election last June because of the proportional representation system. The reason Fine Gael lost the election was that they fouled up their organisation in about four constituencies. It is not appropriate for me to go through those constituencies but it is apparent to anybody who has carefully analysed the results or who watched developments in the media during the course of the election campaign that that is the only reason there was a change of Government. I wish Fianna Fáil well in Government because the country needs a decent Government. I do not know if they will get it, Fianna Fáil should bear in mind that the electorate were satisfied with the government they were getting before the general election. That is the only result one can read into the polling returns after last February's election.

People in business, older people who are settled in their lives or older people who are unemployed have mellowed. The businessman can batten down the hatches and reckon he can pull through; the middle-aged person who is unemployed, although depressed, at least recognises that it may be best to take those things philosophically and the older people who are not very well off although they have the worry of old age are wiser and perhaps better able to deal with the type of problems that economic difficulties can face them with. Young educated people who are aware of the shenanigans behind the dancing that has gone on by the Minister for Finance, the Taoiseach and the Government since the budget, are in despair that nobody cares for them or for their future.

I want to nail the lie regularly written by one Irish Times correspondent, who claims that the previous Taoiseach, Deputy Garret FitzGerald, preferred to run an economy rather than a country. That is all very fine when things are going right but our economy has gone beyond a situation where one could make any claim like that. The reality is that the dreadful state of our economy is damaging the country. If John Healy, the correspondent in question, has any doubts about this let him ask the thousands of young Irish people who are unemployed and ask the very poor people who have very little hope to look forward to, when they see what is going on at present, what they think. Perhaps he can come back then and talk about running the country and running the economy.

The situation of young people and those who are deprived will get worse if our economy is not brought under control. We cannot afford more taxation. We have reached saturation point. All the money we have borrowed and all the taxation we take from the public is not delivering the type of services and the type of goods the electorate want. They are dissatisfied with what they are getting. Despite that we have within the community a growing pocket of people who are neglected and will continue to be neglected. I am speaking particularly of young people who cannot get work.

There is not a great deal of difference between the two budgets we have had this year. I want to talk about some of the differences because a lot of nonsense is being spoken about them. There were three major facets of Deputy Bruton's budget which caused offence to Fianna Fáil, the VAT imposition on clothing and footwear, the food subsidies and the taxation of short-term social welfare benefits. There has been so much talk in the House over the years about food subsidies by Governments who introduced them and took them away and Oppositions howling when things like that were done, that there is very little one can say about them. Nobody likes introducing a tax or removing a subsidy because it is not the popular thing to do at the particular moment. Fine Gael have introduced them a lot more often than Fianna Fáil have done. Fianna Fáil have removed them more times than Fine Gael have done. The boot has been on both sides of the House. The only thing I can say is that in the future the boot will be on the other foot so far as Fianna Fáil are concerned. We must bear in mind that it is highly questionable if food subsidies benefit the people who really need to benefit. I accept that Fianna Fáil would have been foolish not to grab that as a good election platform. If the Coalition Government recognise that there would be an election immediately following the budget they might not have gone for the food subsidies.

I believe the VAT imposition on clothing and footwear deserves more scrutiny because I believe it is a mistake that that tax was not introduced. I preface my remarks by saying nobody likes to introduce a tax but we are not living in times when we can simply do what we like despite the fact that many Members of the Government seem to think we can. A clothing tax is a very emotional thing. Now that the election is over perhaps we could look at this more closely. We hear a lot of talk about clothing and footwear being a necessity and they should not be taxed. I am not sure that the presumption of necessity is fair. When one sees shoes being sold at from £40 to £70 a pair, items of clothing sold at £100, £150 and £200, and in sales fur coats reduced from £2,500 to £2,000, one must wonder that goods of that nature can be purchased without the imposition of one penny in taxation. When one goes to buy a pint, a newspaper, a gallon of petrol or almost anything else, one is subjected to tax. I do not accept the argument that because clothing is necessary it should not be taxed. A lot of things that are necessary are taxed. I do not see why clothing or footwear should be any different from anything else.

Up to 70 per cent of all the clothing bought here is imported. We cannot apply duties on imported goods for obvious reasons, membership of the EEC and other trade agreements, but we should do everything we can, when taking our balance of payments problem into consideration, to try to control that. It does not seem to make a lot of sense not to have tax imposed on clothing when so much of it is imported. It is widely accepted that a tax on clothing is a progressive tax because the higher the income one has the greater the percentage of one's salary one spends on clothes. The most expensive clothes are purchased by the people with the highest incomes and the most expensive clothes purchased here are imported clothes. It seems to make good sense to tax clothing.

I say this with no disrespect to people in the trade. I understand there is a massive mark-up in the retail clothing industry, 100 to 150 per cent. This seems to me to be an area, with that type of mark-up, which is ripe for taxation. I suspect that people in the clothing industry would not agree with me in relation to that. There were two arguments against clothing tax which one has to consider seriously, one of which is employment. That seems serious enough on the face of it but when one thinks about it, it is a spurious enough argument because any tax which is introduced must have the effect of dampening employment prospects. In difficult economic times it must have the effect of causing unemployment. If one makes inquiries from either the drink trade or the motor trade about the effects of taxation in recent years one will ascertain that the result has been a drop off in employment and this is true also of most other trades.

The claim by Fianna Fáil that 5,000 people would have lost their jobs because of what we were proposing was simply rubbish. It was a claim that Fianna Fáil were not able to substantiate. I understand from inquiries I have made from the CII and other quarters that the true figure would have been fewer than 1,000. I have no wish to see anyone lose his job but we must examine the situation in the context of what happened elsewhere and I will be dealing in a few moments with what Fianna Fáil proposed by way of making up the money they were losing by not imposing a clothing tax.

There is only one argument that is valid about not imposing a clothing tax and that is that there are some people, particularly those on low incomes and those with large families who could be affected badly by such a tax, but my answer to that is that those people should be subsidised in some way. We have a problem generally in regard to our very expensive social welfare system in that money does not always seem to go to those who need it most. I would argue that the income credit tax system which was proposed by the Coalition but abandoned by Fianna Fáil, together with the child benefit situation plus the payment of £9.60 per week to wives working at home, would have come readily to the assistance of those who are worst off. Perhaps more was needed and, if so, it should have been delivered; but the mere fact that some people would have been put in difficulty was not a sufficient reason to abandon a tax. It would cost only a fraction of the overall revenue generated to cushion those people who would be affected by the tax.

However, that was not good enough for Fianna Fáil and they decided on the gimmick of asking industry to pay at an earlier date their VAT liabilities on imports and also their corporation tax liabilities. The VAT revenue of £140 million is, with the exception of, say, £40 million in respect of goods that can be disposed of quickly, a permanent loan to the Government. This £100 million will have to be carried by the manufacturing industry particularly since they import raw materials and must now pay the VAT within 15 days of importation. They must process, market and sell the goods before they can get the VAT back and that may involve up to six months. They will be out of pocket to the tune of £100 million for that time. That is why I say the money involved is a permanent loan to the Government, a loan that goes way beyond this year and next year.

If all this money is to be borrowed on the Irish market what will be the effect on interest rates? Surely it will have the effect of increasing them. We know that interest rates are at an all-time high and we do not appear to be able to lower them. I believe that to be as a result of our weak currency, that people are afraid to borrow abroad unless they have a guarantee from the Government on the exchange risk. Another £100 million taken from the home market must increase interest rates from their present 21 and 22 per cent levels unless the Government decide to take the exchange risk on themselves, but what happens then is that industry becomes an agent for foreign borrowing by the Government. This exacerbates the problem and renders the budget farcical.

Let us consider the consequences on employment of the imposition on industry of this £100 million. In other words, industry will fail to invest the £100 million which they might otherwise have to invest. They must either borrow this money or take it from cash reserves and I do not think that they have cash reserves. The IDA reckon that the capital cost of a job is about £19,000. That is high even allowing for the fact that they are at the de luxe end of the market. The CII in their Newsletter of 1 December claimed that £20 million was the equivalent of 3,000 jobs. That means that £6,500 represents one job. It is a fair average to take a figure of £10,000 capital cost as equalling one job. This means that 10,000 jobs must be lost to industry because of £100 million being taken out.

I do not understand how the Government can stand over their argument against the Coalition's proposals for a clothing tax costing, at the Government's exaggerated figure, 5,000 jobs, when their own proposals will result in depriving the industry of £100 million and must therefore result ultimately in the loss of 10,000 jobs to industry.

All that can be said of the Fianna Fáil budget is that it is massively anti-business and anti-employment. Though they looked after their friends in the construction industry, the Government must accept that while some jobs may be generated in that sphere this will not go any way towards compensating for all the damage that will be done right across the board to industry because of the proposals in relation to VAT. There is no hope in the budget for younger people who are unemployed. Despite all the lip service paid during the election campaign by Fianna Fáil to employment prospects for young people, there is no hope on this front so far as the budget is concerned. Indeed, I would argue that the budget provisions make the employment position considerably worse for young people. One can only have the greatest sympathy with young people, with those who are poor and with those who are not organised to go out on the streets and shout loud enough to bring about action from the Government, as some sectional interests are able to do, interests who are in a position to deal with Good Time Charlie.

There are some very fundamental problems in our society. Apart from the problem of unemployment there is the problem of poverty. Despite the existence of an expensive social welfare system every Member of this House will be aware from his constituency work as well as from various reports that are available that there is the real problem of poverty. We seem to be unable to provide sustenance and support on the scale necessary to help those concerned.

There is the major problem of foreign borrowing. We have a very high level of taxation and we seem to have an electorate who do not relate high taxation and foreign borrowing to the services they continue to demand. There is also general lack of incentive to work. There is absenteeism from work. We have very considerable participation in black economy. There is a loss of competitiveness in industrial production. All of these factors appear to be the symptom of some similar disease. One cannot find that any of the last five budgets and particularly the one we are talking about has made any serious attempt to deal with any of these problems. Deputy Bruton, as Minister, attempted in different respects to deal with some of them and there were promises from previous Ministers of Finance that something would be done about the situation but on this occasion the reverse has been the case.

I cannot propose solutions for all our problems but it is time that we took a hold of ourselves and looked at everything we are doing. With all the borrowing that has gone on and the massive increases in public expenditure one must stop and ask the question, as people in the street are beginning to ask; "What have we seen"— for example from 1977 to 1982 —"for the phenomenal borrowing spree or the increases in taxation?" There is only one conclusion one could come to and that is that we have many more people employed in the public service. Without denying or begrudging what they are getting the people in the public sector are being paid a lot more than those in the private sector. It should be remembered that 25 per cent of our work force is in the public service. Their pay and pensions amount to £2.1 billion per annum and it takes 50 per cent of all our tax revenue to pay for this. Increases in numbers employed in the public service far outstrips increases in numbers employed in the private sector and wages in the public sector have far outstripped wages in the private sector. I have no objection to that but I pose the question: what have we gained from it?

I should like to deal with the various services that are on offer. The Health budget is a very big one but can we say that we are any healthier or that there are fewer people going to hospital? In fact, the contrary seems to be the case. It seems extraordinary but there are many more people claiming short-term sickness benefit than a few years ago, so much so that doctors have expressed alarm about the situation. Reports are being published about it. We do not appear to be any healthier. Can we say that we have engaged in any form of campaign of preventive medicine that has proved itself worthwhile? I do not think there is a scintilla of evidence to suggest that. I should make it clear that I am not in any way referring to the quality of those working in the public service. I do not have anything to complain about in regard to those working in the public service, those concerned with security, education or the local authorities. I am sure they are doing the best they can and many of them operate under very difficult circumstances. However, we are responsible for the cash of the country and we must examine the returns we get for that expenditure. It is my view that returns from services are highly questionable taking into consideration the amount of money that is spent.

The education budget has been massively increased in recent years but there has not been any significant reduction in the pupil-teacher ratio.

Rot, nonsense.

There has not been any significant reduction when one adds together the tens of millions of pounds that have been spent on education. I should like to ask, in relation to education, if the right people have been benefiting from all the expenditure on education or have the people who can afford to pay, or pay more, been drawing the benefits from it? I am not blaming the former Minister for Education for this but the reality is there: we spend a lot of money on higher education but can we say honestly that the disadvantaged in our community have had an opportunity to get there as a result of the millions of pounds we have spent? I do not think that is the case. Can we say honestly that our national schools are more presentable than they were? Are we satisfied with the conditions of those schools? We have seen television programmes about the disgraceful condition of national schools behind the Minister's former headquarters. Can we say that more money has been provided to maintain them? The reality is that it has not been made available. The bulk of the money has gone to employing new staff, not all teachers, and to meet a massive increase in wages. Is the quality of the service significantly better? I do not think it is.

In relation to the Garda the force size increased between 1977 and 1981 by 17 per cent but the crime rate has soared and the detection rate is down. I am not blaming the Garda for that. As a solicitor I understand the frustrations the Garda have in trying to deal with their difficult job but we have pumped that money in and we must ask if we have got a return. I do not think so.

Can we say that we have better roads? Are our communications any better or is our infrastructure any better? The reality is that they are not. We should not cod ourselves. The fact is that the politics of profligacy have benefited the country damnably. This generation of politicians got the country largely debt free, a country that had gone a long way towards bringing under control the problem of emigration. We were able to employ people. What are we about to pass on to the next generation? We are passing on a country that is up to its neck in hock, a country that cannot employ people and is rejecting tens of thousands of people annually. We are passing on a country that has a fierce problem in regard to poverty and cannot deal with it. We have a community which seems to have developed very selfish habits and seems unconcerned about cost. I do not think the community can be blamed all the time for that. In my view politicians have helped considerably in leading people to believe that all is possible in our little country, that we never have to count the cost, that Knock airports can be built and justified and more of the like. What has been neglected in all this spending? I should like to highlight some of the things.

I am chairman of North Tipperary County Council and we have had our estimates meeting and our special housing and sanitary services meetings. We are all aware that our roads are the greatest national asset we have. Even though we complain a lot about them in terms of capital expenditure if we were to build them now from scratch they would cost a lot of money. The county manager in North Tipperary was asked to estimate the value of the road system in his area. At the end of December last we had 1,738 miles of road and the county manager estimated the capital value at £100 million. We have been getting so little money for roads in that area in the last few years that there is nothing new we can do about them but we are concerned about retaining and maintaining the road structure we have. Unfortunately, in common with many other councils, our roads are getting worse. The potholes are now so big that the foundation of the roads are beginning to give way. In the course of a report to the council the county manager stated:

It is clear that much more money would need to be spent to keep this extremely valuable asset in a proper state. To do so requires substantially greater investment for all types of road.

The county manager then referred to a report of the acting county engineer which stated that:

The lagging of funds allocated behind increased costs has resulted in a continuously widening gap between the required level of maintenance, including surface dressing, and that which can be achieved with the limited funds available.

The county manager continued:

The current attainable cycle for the surface dressing of county roads is 15 years while the desirable cycle is nine years.

Therefore, just to maintain our roads we need to resurface them every nine years but we only have enough money to carry out that work every 15 years. The consequence for our roads is plain for everybody to see. They will get worse until they ultimately collapse. When that happens we will have lost far more of the £100 million than can be imagined now. That problem must be arising throughout the country.

The sanitary services area is not often identified as being important but in my view it is. There will not be any orderly development of any area, particularly a rural area or an area near a town unless there is a water supply scheme and a sewerage scheme. In North Tipperary we have 32 schemes for construction listed on our priority list. In relation to that the county manager stated:

The cost of completing the first ten schemes on the priority list, including the two regional water supply schemes for Nenagh and Thurles, would be of the order of £16,500,000 which, if based on the level of capital allocation received in 1981, would take about 22 years to construct.

That means that one-third of our plans on present levels of allocation will take 22 years to complete. What hope is there to get houses built for our young population with that sort of financial provision and all the talk we have heard from the Taoiseach about the importance of borrowing to invest in the future of our country and infrastructure? That is all rubbish because the reality is that the Government while in power over four years completely ignored local authority spending on the capital side, housing, sanitary services and roads.

The awful waste in the country has been spoken about by enough people and I do not wish to go into detail on it. I am concerned about my time allocation and wonder about how much time is left to me?

The Deputy is all right. He has another 20 minutes.

There are other things I wish to say which are of importance. We must bear in mind this massive waste. Over £100 million spent on the attempted eradication of bovine diseases has been lost. We have not advanced one iota in our campaign, because of bad management and bad expenditure. This is not the occasion to ask why, but the scheme has not worked and this should be known. The responsibility for the bad management is not just with the Department of Agriculture, the vets or the farmers. The responsibility lies with the Members of this House who vote these moneys to see that they are properly spent. The money has been spent over years and it should have been possible to identify the mistakes which were made and arrest them. These mistakes are, unfortunately, still being made and millions of pounds are being spent on that scheme.

Expenditure under the heading of the NET plant in Marino, Cork, is £137 million for 1980. I will not detail everything that happened in that connection, but that situation developed over a few years. The promoters of the plant, extraordinarily, did not always tell the Government, or the Government Department, everything that they should know. There was a lack of communication about something which ultimately cost £137 million. This plant was to lose millions of pounds every year and it is to have the benefit of a subsidised rate for our national gas from Kinsale. This is mind-boggling.

CIE, a semi-State body, are losing £100 million every year. There have been three consultants' reports in this connection. The second-last Minister responsible, Deputy Reynolds, asked for a debate in the country. He wanted a debate anywhere but in this House. He was not prepared to indicate what his decision would be. I make no apologies, when we were in power we did not do it either. This was the third consultants' report, which cost a fortune. I am not complaining about CIE employees — I understand that the morale there is very low, because they do not know what has happened. However, we cannot have this situation continuing, with no plans being made and nobody deciding what is going to happen. We lack either the inclination or the courage to face up to the reality.

I accept that there is difficulty in cutting back on public expenditure. What is really necessary is responsibility in Government. You must have public opinion behind you and no effort is being made by this Government to get this. The Knock airport is a notorious scandal. The conduct of the Minister for Finance since the budget has disimproved. I have to say that. He had a facade of concern when reading his budget statement to the House some weeks ago. Indeed, a lot of people believe he did a good job, better than that done by Deputy Bruton. His budget did not seem to be quite as stinging as the previous one, but at that time people did not appreciate the size of the PRSI bite. People have not yet appreciated the proposed reduction in the standard rate of tax band. It was wrong of the Minister to hit the width of the standard rate of tax band, at the same time knowing that the PRSI increase was so significant. That was a bad mistake. However, that was a choice which he had to make. But even he did not appreciate the consequences of his PRSI proposals.

I do not know how one should judge what the Minister has done. The utter inconsistency and total collapse of the position he adopted do a great deal of damage so far as mobilising public opinion is concerned. People now recognise that, if you demand and threaten, you will get your way with Good Time Charlie. However, you have to be well organised to do that. The poor, the blind, and widows are not well organised and do not succeed that much. People who have jobs, many with good and secure jobs and unions behind them and who pay pay-related social insurance, are organised and can succeed. In fact, the increase in the PRSI is not sufficient to pay for all the benefits which the PRSI-paying people will get in the course of the next 12 months. As I understand it — perhaps the Minister or someone wlse will be able to correct or advise me on this — the whole PRSI fund is 25 per cent lower than is necessary to pay all the demands which the PRSI claimants make on that fund.

There is no doubt but that our taxation levels are very high and people will not take any more. I understand and accept the frustration of the PRSI sector who are faced with this further theft, as they would call it, from their wage packages every week. What I do not accept is that it is right for a Minister to say that he will credit them with £45 million which he will find somewhere else, without saying where he will find it other than general taxation and savings, and Fianna Fáil have never been good at savings. No indication has been given of who has to pay this £45 million. Is it right that people outside the PRSI scheme, some of whom are not working, will have to pay for this? Is that fair? I frankly do not think so. It is not fair to put this extra on cigarettes, drink, or anything else. I acknowledge that PRSI is very high and I do not know if it is being spent to our best advantage. I would remind the Minister that there is evidence of very considerable waste there. Concerning short social welfare sickness benefits, for example, a report was published by the Economic and Social Research Institute in January of this year, authored by Gerald Hughes. I quote from this report:

During the last 25 years the number of spells of illness for each insured person has doubled and the number of working days lost per person insured has increased by three-quarters.

I quote now from another part of this publication:

At the beginning of the 1950s, absence from work due to sickness in Ireland was not exceptional by international standards, nor was its rate of increase exceptional up to the end of the 1960s. During the 1970s, however, the rate of increase in the frequency and duration of certified incapacity way exceptional, compared with Britain and Northern Ireland and at the end of the 1970s the absence rate in the Republic was slightly higher than in Northern Ireland and nearly double the British rate.

Effectively, this report established beyond all doubt that we are getting sicker and sicker on a short-term basis in this country as the years go on. It also indicates that this situation seems to be associated with the fact that one is well paid when one goes sick. I do not know if the Minister is aware of a report published by Dr. Andrew Rynne, a medical practitioner who set out to examine this extraordinary increase in short-time illness. The Irish Medical Association have been concerned about this for some time and they reckon that many of the shortness term absences are due to socio-economic, rather than medical, reasons.

Dr. Rynn's report was published a few weeks ago and he concluded that 25 per cent of people in receipt of disability benefit are — I use his words —"dossers". There is nothing wrong with them at all. The cost to the State is £36 million per annum, or £3 million per month. I quote from Dr. Rynne's publication:

Anyone paying PRSI can claim to have a back ache or anaemia and draw certificates without the slightest difficulty. The chances of them being brought before a referee after three months is minimal.

Could the Deputy tell me from what publication he is quoting?

I do not have the precise title of the publication, but it is a report published by Dr. Rynne. I expect that it was published by the Irish Medical Association. I should have known this. The point was also made by Dr. Rynne that national health insurance certificates are signed by nurses, doctors' receptionists and other non-medical people. It appears that the whole system is fouled with abuse and waste. There are 220,000 medical certificates going into the Department every month and there are only 15 referee doctors. General practitioners are in a position where they are unable to refuse medical certificates because there is no independent second opinion to which doctors can refer a patient who is complaining of back ache and which the doctor cannot diagnose as being there or not. If there was an independent referee the doctor might be able to stop somebody making a fraudulent claim.

Doctor Rynne estimated that if 50 doctors were employed on a referee panel by the Department the matter could be brought under control. He also suggested that short-term social welfare benefits, if taxed, would help to bring this problem under control. We recall that Deputy Bruton in his January budget proposed taxation of short-term social welfare benefits but Fianna Fáil, for some reason, found this unacceptable. It is strange that they found it so unacceptable because in the budget speech of 1978 the then Minister for Finance identified this as a growing problem and felt something should be done about it. In the 1979 Finance Bill there was a section covering the whole problem of taxation of short-term social welfare benefits and making provision for it. In 1980 when "Good Time Charlie"——

You are not allowed to refer to the Taoiseach in that manner.

May I refer to him as the good time Taoiseach?

No, you must refer to him as Taoiseach.

When Deputy Haughey became Taoiseach for the first time that proposal disappeared. In the budget debate at that time Deputy O'Kennedy stated at columns 726-727, Volume 318 of the Official Report:

The Government have been reconsidering the planned taxation of short-term social welfare benefits from 6 April next, which was provided for last year. The new tax exemption which I have proposed for those on lower incomes would reduce any revenue gain from the effects of making short-term social welfare benefits taxable and, moreover, the new tax structure will improve the incentive to work. In these circumstances the Government have come to the conclusion that the proposals should not be implemented.

The Minister was saying at that time that, if there was any evidence of abuse, short-term social welfare benefits should be taxed. In case anybody thinks I am a miserable soul who wants to tax social welfare benefits, he should not forget that widows' pensions are taxed, old age pensions and any long-term social welfare benefits are also taxed. The incredible thing is that the reason people seek disability benefits is to avoid going into a higher tax bracket or to get back tax. They not only get their short-term pay-related benefit, they also get back tax. I do not think that is fair to people who work all the time and have to pay for this. The PRSI lobby should be reminded that there are millions of pounds wasted on people who are abusing the system. Dr. Rynne estimated the figure at £36 million. Taxation of short-term social welfare benefits would bring in £10 million and there seems to be a great justice in doing this. Those two sums added together make a total of £46 million. I wonder why the Minister, Deputy MacSharry, did not see fit to eliminate waste in the PRSI system and save £46 million which he now must find elsewhere in taxation. Is it because he is cowardly?

When I was canvassing in the recent election—and I am sure other Deputies had the same experience—I was hounded about people abusing social welfare. It will develop into a major issue and we have the responsibility to see that the system is not abused. I do not want to see people prosecuted or going to jail but I find it hard to blame them for abusing the system because it seems that politicians are playing a part in it and are happy that it should occur. We should design systems which will not be an incentive for people to stay out of work.

Mr. Con Power of the Confederation of Irish Industry claimed that in the four to six weeks before the end of the tax year the applications for disability benefits soar. He said in some cases the level of absenteeism reached a level of 20 per cent during that period. We have a responsibility in this area which we are not discharging. We have a similar responsibility in relation to tax evasion. We have taken some steps with regard to tax evasion but in all these areas people like to cheat the system and to operate in the black economy. We have not made any effort to deal with this problem. I do not believe that the Minister for Finance, when preparing his budget speech, really thought about all our problems, it was simply a question of balancing the books for the next 12 months. That type of approach is something we can no longer afford to follow because people are beginning to wonder what politicians are doing. They are asking why we are so much in debt, why our taxation is so high and what we are getting for it. We must mobilise opinion behind us. The tragedy of the performances of the Minister for Finance and the Taoiseach since the budget means that we have lost something which was built up. It was accepted that we had economic problems, that the Government had to deal with them and that whatever Government were in power deserved the support of the people in dealing with these problems. We must face up to the reality and we should be discussing these problems a great deal more than we do at present. Each member of this House has a responsibility to keep a check on how money is spent. I hope that the paper published by the last Minister for Finance, "Better Way to Manage the Nation's Finances" will be put into effect because if that is done people will not be able to stand up here and criticise taxation and at the same time demand benefits.

The Oireachtas Joint Committee on State-Sponsored Bodies serves a very useful function in that regard and is worth — I say this with no disrespect—hundreds of sitting days of this House because it makes proposals in problem areas. I cannot say it solves problems but at least there is great co-operation between members of different political parties. I would ask the Taoiseach and the Minister for Finance to try to get public opinion behind them in their efforts to bring things under control. We have a very young population and in many ways our problems are only starting because we are not able to provide them with housing, schools, hospitals or infrastructural requirements which are needed. Even if we never took on another person in the public service the cost of maintaining it will soar because, as civil servants retire, money will have to be found to pay their pensions. I do not feel confident that the Government are going to tackle this problem. Perhaps when the Dublin West by-election is over sanity will return but I fear that the Government have lulled themselves into a feeling that it is wrong to tell people the truth and wrong to face reality. They do not know the difference between reality and the twilight zone in which they appear to be living. I wish them a very short term in office, and even though none of us likes fighting election after election, if the Government are not prepared to face realities and to deal with the problems, they do not deserve to be in office and for the sake of the country and in the interests of the people they should leave that position.

Many people have decried the sense of pessimism that was created by the previous Government. I myself have done so on occasions, but until I listened to Deputy Molony I had not thought that the spreading of that philosophy had been so effective. Here we have a young intelligent man, just starting out on his political career, obviously injected with large doses of pessimism. He allowed it to surface right through his speech — there is no ray of hope, no rallying cry for young or old in any aspect of our national life. This saddened me because I know Deputy Molony is capable of better than that. I hope that sometime the evil effects of that injection of pessimism will wear off.

I should begin my contribution to today's resumed budget debate by briefly reminding Deputies of the objectives and principal provisions of last month's budget. It had, in summary, three principal objectives, namely, the stimulation of employment, the reduction of inflation and the alleviation of poverty. I am surprised Deputy Molony did not advert to this. Our budget is less inflationary than its predecessor. The effect of this budget on the consumer price index will be to raise prices by 2¾ per cent; the Coalition's increase would have been 4¾ per cent. Our decisions to maintain food subsidies and to freeze all CIE city fares, among other things, reflect our concern to reduce householders' bills.

We are stimulating employment directly by injecting an additional £50 million this year into building and construction in order to improve housing, education and sanitary services. We also increased social welfare benefits by 25 per cent in order to improve in real terms the living standards of social welfare recipients.

Our purpose was to eliminate the effect of the Coalition's decision to increase VAT on clothes and shoes from zero to 18 per cent. Deputy Molony treated rather cavalierly the whole question of employment, something which we were very concerned about. All the representatives of the clothing and shoe industry, from manufacture to retailing, indicated that there would have been very heavy losses of jobs, but this was defeated when Deputy Bruton's budget was rejected here in January. Notwithstanding the difficult state of the public finances, we decided that it was necessary to take these measures to improve employment and protect living standards. We accomplished this without straying from the Coalition's own broad financial objectives. When introducing his budget last month, my colleague, the Tánaiste and Minister for Finance, Deputy Ray MacSharry, indicated that we sought to reduce the current budget deficit for 1982 to £679 million and the total Exchequer borrowing requirement to £1,683 million.

These remain our financial targets and they compare favourably with the Coalition's targets of £715 million and £1,661 million respectively. When one takes into account the loss of the two months this year due to the defeat of the Coalition budget, it is no mean achievement to have been able to retain similar financial objectives. The Opposition benches, as they would like the country to believe, do not have a monopoly on financial rectitude.

As first Government speaker in the resumed budget debate, it is appropriate for me to comment on the recent decision by the Government to provide a special tax allowance of £312 this year for workers paying the full rate of PRSI. At the outset I should say that since the increased PRSI rates were applied some weeks ago, much of the comment, I feel, has been rather unbalanced. The immediate reaction seemed to be one of dismay, even anger, among many of our citizens at the reductions in take-home pay. This is, I suppose, understandable, but I think that we, as politicians, perhaps failed to communicate to the community at large the purposes to which these increased rates would be applied.

This was glossed over superficially by Deputy Molony, who seemed to think of it as a party political investment, something which the House, in its wisdom, would reject. I want to point out that this was simply in keeping with what we have been doing in Government for some years. I should like to comment briefly on the remarks of the previous speaker about social welfare benefits. It has been the objective of the Fianna Fáil Government to give substantial increases in social welfare benefits where the need was greatest. Fianna Fáil Governments have been equally dedicated to weeding out any people in receipt of such benefits who are not entitled to get them. The present Taoiseach, as Minister for Health and Social Welfare, made great progress along those lines. The ideal of those who were in need of benefits getting substantial increases and those who were trying to work the system being eliminated was well under way during the term of the previous Fianna Fáil Government.

Of the total PRSI increase of 2¾ per cent, 1 per cent will directly stimulate youth employment, which this Government rightly holds as their principal priority in the years ahead. The remaining 1¾ per cent finances in part the significant and necessary increases to social welfare recipients. These additional moneys are therefore being applied to alleviate poverty and unemployment, which we all recognise as priority social areas.

I should like to point out to the House that the imminence of the PRSI increases was known from January when they were announced by the Coalition Government in their budget. Consequently, the time available for mental re-adjustment was longer than it usually is when such important impositions are made.

Our recent decision to allow these PRSI increases as an offset against workers' tax bills reflect a belief on our part that workers were justified to some extent in complaining about the relatively significant increase in PRSI contributions. I regard the new allowance as generous, given the State's considerable financial difficulties. In percentage terms, the new allowance favours the poorer-paid worker vis-à-vis the high income earner, and I regret that this fact did not receive due attention when the announcement was made last Thursday. Indeed certain statisticians and financial commentators went out of their way to try to indicate that this is not true. I call the attention of the House to what the ICTU pointed out in a statement on Monday, namely, that the vast majority of the 550,000 workers paying the full PRSI rate would benefit to the extent of at least £2.10 per week, equivalent to a pay rise of £3.23 a week. I would like to take this opportunity to congratulate congress on their balanced contribution to this debate.

The recent increases in PRSI contributions have again renewed calls for equity in taxation. In establishing the Commission on Taxation two years ago, this Government recognised that reform of the taxation system was necessary. While any major overhaul of the taxation code must await the deliberations of the Commission on Taxation, nevertheless this Government took a number of steps in this budget to widen the tax base by increasing the standard rate of corporation tax from 45 per cent to 50 per cent and the small companies' rate from 35 per cent to 40 per cent, by imposing substantial levies on the banking and insurance sectors and by new measures to tax capital gains and capital acquisitions. All of these measures are designed to achieve greater equity in taxation, which we see as necessary in order to reduce social inequality. I have dwelt of necessity in the earlier part of my script on the more topical aspects of PRSI and equity in taxation. As I have said, the Government in this budget have been very careful to spread the taxation burden in a compassionate manner, notwithstanding the difficult state of the public finances. Our major efforts in the months ahead will, however, be directed into employment creation. At present, we are trying to create the right climate for renewed growth. It is folly to undermine, as the previous Government did, our economic confidence and international credibility with talk of bankruptcy and other so-called intractable economic problems.

It was apropos of this that I made the remarks at the outset that I was disappointed to see and to hear that a young man at the beginning of his career should be so infected with pessimism that he does not seem to hold much hope for this country in the near future. Such talk was demoralising and only tended to promote regressive attitudes to national development, thereby creating the climate where such prophecies would tend to be self-fulfilling.

In this type of morale situation this is what tends to happen. Prophecies of gloom and doom tend, by the way they infect the people, to become self-fulfilling.

It is common cause on all sides of the House that one of our most urgent infrastructural needs, if we are to ensure economic and social progress, is the upgrading of our telecommunications service to the standards generally obtaining in the European Community.

It is the aim of my Department's five-year development programme to raise the standard of our telecommunications system to that of our EEC partners and there is every reason to believe that the programme targets will be met. The improvement cannot but be helpful to the economy.

The development programme was launched in 1980 and much of the effort of the last two years has been directed towards the acquisition of sites, design and provision of buildings, the ordering of exchanges and network planning. Of themselves these activities do not lead to a direct improvement in the telecommunications system. They are however a very important step along the road towards that improvement. Nevertheless some improvements are already evident. The STD service is much better than it was two years ago, although still a long way short of the 4 per cent failure rate we are aiming for. The first digital exchanges in Athlone and Kells have been brought into operation and we are now reaching the stage where the waiting list is now stabilising if not actually declining. In 1982 new exchanges will be brought into service in Dublin, Ballinasloe, Galway, Naas, New Ross and Tralee to mention but a few.

The scale of investment necessary to bring about the improvement is massive — over £220 million last year and £238 million this year. Investment at this high level is essential to break the back of the problem but it does not have to continue indefinitely.

It will, however, have to be paid for. That is one of the reasons for the steep increase in charges in recent years. It would be my hope that, as investment demands ease, and numbers of subscribers grow, the service will be able to meet its financial targets while keeping price rises well below the level of inflation. Experience in other countries suggests that this should be possible. I am sure it is a matter that Bord Telecom Éireann will be giving urgent attention to when it assumes responsibility for the service.

Improvements in a service such as telecommunications take time and as is clear from the figures I have just mentioned, lots of money. Rome was not built in a day and the deficiencies in the telecommunications service — caused, let it be said, through lack of investment over a long number of years — cannot be rectified in a week or a month, a year or even two years. Progress has been made and progress will be made on an accelerating scale over the coming years and I am confident that the targets of the current development programme will be largely met within the time-frame of the programme.

The substantial investment in the telephone service will provide a spin-off to the economy in a variety of ways. In addition to the benefits that an improved telephone service will give the business and industrial sector and the community generally, the investment will also have the following advantages for the economy: it will provide continuing substantial employment in the Department in the development of the service; it will provide appreciable employment in firms supplying stores and equipment for the expansion programme; it is enabling a continuing level of employment to be maintained in the building industry on work for the Department; it is putting substantial money in circulation in the economy since much of the investment is in staff, in stores and equipment manufactured in this country; it is grant aided by the European Regional Development Fund and loan aided by the European Investment Bank and other EEC institutions.

Altogether, therefore, investment in the telephone service is highly desirable from many points of view. It is clearly desirable from every aspect that it should be continued, and there is no need to offer any apologies for the borrowing of funds to develop the service.

In so far as the postal service is concerned, my Department's aim has been to provide an efficient, reliable service. However in recent years the standard has been rather less than satisfactory.

Regular monitoring of the standard of postal service in 1981 showed that about 84 per cent of letters were delivered on the next working day after posting; this is about 6 per cent short of the target which is aimed at. Failures to meet the target arise when the volume of letters posted cannot be handled by the available sorting staff within the tight time limits which exist between letter collections and mail despatches. Difficulties arise from road traffic congestion in the cities and towns and some staffing inflexibilities. These problems tend to arise especially in Dublin which handles over half of all the mail in the country. Dublin is the hub of the mail network and difficulties there can be reflected in the standard of service throughout the country. Management efforts are being directed to overcoming such problems as exist and improving the quality of service to the excellence which was maintained over a long period of years.

The public's perception of the postal service is, of course, influeced by cost as well as quality. I regret the necessity for the charge increases which were implemented on 1 April. These increases were approved by the previous Government and announced in the draft budget on 27 January last. The increases are necessary to enable the postal service to approach break-even this year. It has been the accepted policy of successive Governments that the service should pay its way taking one year with another. The postal service is highly labour intensive, over 80 per cent of its expenditure being on pay and pay-related items. By and large, increases in charges arise because of pay increases, and these increases are negotiated under the general conciliation and arbitration machinery for regulating pay in the civil service. In fixing pay rates regard is had to comparisons with outside employment and to the provisons of national pay agreements or national understandings. These latter usually provide for minimum increases for lower paid workers which apply to the large numbers in the basic grades in the postal service, with the effect of pushing up the average percentage increase for these workers.

The postal service has been incurring large deficits in recent years: £17 million in 1979, £14.5 million in 1980 and £10.6 million, estimated, in 1981. The relatively frequent rate at which increases have occurred in recent years, therefore, includes an element of "catching up" with increases in costs. Of course the service has also been hit by the high increases in the cost of transport and energy which have been a feature of recent years.

The only alternative to meeting the costs of postal services from charges to the public is to meet them from taxation. That has never seemed to be an equitable solution and there is no reason to adopt it now. It was suggested in recent weeks that the cost of services might be carried in a different way by users. A spokesman for the Confederation of Irish Industry stated, for example, that private users should pay higher charges than industry. The rationale for this proposal was that industry is competing internationally and would suffer the effects of higher costs. While I can sympathise with the rationale I am not sure that it is a good principle to apportion costs other than on the basis of use of services. There are, in any event, other considerations in the case of the postal service. Private users originate only a quarter of all mailings and charge increases to them would, therefore, have to be very large indeed if the proposed policy were to be implemented. Moreover the present printed paper class of its nature benefits business primarily and this class is effectively subsidised to the extent of about 18 per cent by first class mail.

The problem of expenditure growth is being tackled and it is not the case that cost rises are automatically passed on to the user of the services. Sustained efforts are made to identify and trim any superfluous spending. Some savings are, of course, dependent on investment in, for example, new transport or better buildings to allow for more efficient operations, and I am hopeful that the funds required will be available to the extent possible in present circumstances. Substantial savings have been made in recent years with the continued motorisation of rural postal deliveries and as a result of eliminating Saturday deliveries in response to a staff claim for a five day week. It is a measure of the commitment to cost containment that over the past ten years staff numbers in the postal service have actually been reduced by about 650.

In conjunction with the increase in telecommunications and postal charges, fees in respect of licences for radio equipment and wireless telegraphy examinations have been increased by 20 per cent. The items covered under this increase are business radio licences, experimenters' licences, ship and aircraft radio licences, the examination fees for radio communication operator's general certificate and radar maintenance certificate. The fees involved remain quite modest — for instance the licence fee for a radio system comprising a base station and mobile stations rises from a fixed sum of £8 plus £8 for each station to a fixed sum of £10 plus £10 for each station. There has been a very rapid growth in recent years in the use of mobile radio systems — in the past five years the number of licences taken out has increased by about 122 per cent. This growth reflects a growing sophistication within the commercial and also the professional community and a greater appreciation of the importance and value of good communication facilities. It is also, of course, a recognition of the contribution which mobile radio communication can make towards cutting energy costs for industry.

Revenue from these sources currently amounts to around £140,000 per annum and it is expected that the increases granted will bring in an additional £30,000 over a full year.

Deputies are aware that it is proposed to reorganise the postal and telecommunications services in the form of separate State-sponsored bodies. As announced in the White Paper, which was published in May 1981, it is the aim of this Government to have the two State-sponsored bodies set up at the earliest possible date I expect to introduce draft legislation dealing with the setting up of the State-sponsored bodies early in the current session. I cannot, of course, anticipate the decision of the Oireachtas by forecasting a date by which the legislation will be enacted but my aim is to have the new State-sponsored companies in operation in the Autumn of this year. Comprehensive consultations with staff organisations, and I lay great stress on this, are in progress and will be continued during the coming months.

A State-owned company, Irish Telecommunications Investment Limited, was established by the Minister for Posts and Telegraphs in April 1981 to facilitate participation by the private sector in the financing of telecommunications development.

The company arranged borrowings of £92 million from a consortium of Irish financial institutions in 1981 to meet part of the cost of the approved telecommunications development programme for that year. The approved programme for 1982 amounts to £238 million of which £80 million will be made available by the exchequer by way of repayable loans. Irish Telecommunications Investments Limited is expected to raise the remaining £158 million.

As indicated by my predecessor when the Irish Telecommunications Investments Limited Bill was before this House towards the end of last year, the intention is that the company will be taken over by the new State-sponsored body for telecommunications when it is set up. The draft legislation dealing with the reorganisation of postal and telecommunications services will provide accordingly.

Before turning to deal with the Government's programme of investment in transport infrastructure for 1982, I should like to comment briefly on the provision in the budget of an additional £16 million in subvention for CIE. In this connection when the board's original estimates were drawn up, the terms of the public sector pay agreement had not been finalised. Sufficient provision had not, therefore, been included in the CIE estimates to cover the full cost of the application of the public sector pay agreement to the CIE work force. This factor together with the Government's decision in relation to CIE fares, which we regarded as an integral part of our anti-inflation strategy, made the provision of additional subvention essential. It would not have been possible for the board, with the £80 million originally provided, to meet their commitments in the current year, even with any economy measures that may be practicable. The additional provision of £16 million will bring the total subvention for the year to £96 million.

The biggest item in the transport sector of the capital budget this year is an allocation of £55 million for CIE. Over half of this is for work on the electrification of the Howth-Bray suburban rail project which is scheduled to come into operation in 1983. This reflects the Government's continuing support for public transport in Dublin city. When this electrified system becomes operational it will actively discourage the use of private cars by commuters from those areas served by the railway.

The Public Capital Programme also provides £20 million for the supply of new buses from the Bombardier plant at Shannon. The first buses produced were 50 single deck vehicles to meet CIE's requirements for their provincial services and their tour operations. Since then production has concentrated on double deck vehicles with the aim of improving CIE's urban bus fleet. To date over 150 double deck buses have been delivered from the factory and have been put into service. The new buses in their distinctive livery are appearing daily on the streets of Dublin and on CIE's expressway services. The new buses should lead to an improvement in the reliability of Dublin city services which when coupled with the operation of the bus lanes will further contribute to a move from private car commuting to the use of public transport.

A provision of £3.5 million is included in the Public Capital Programme for the commencement of work on the assembly over a six year period of 124 mainline carriages for CIE.

CIE recently signed a contract with British Rail Engineering for the supply of components with which CIE will assemble this fleet of 124 new mainline rail coaches. Production plans for the project which will be undertaken at CIE's Inchicore works are currently being prepared and CIE hope to have the first train set operational before Christmas 1983.

The Minister for Finance also announced the Government's intention of completing the Connacht Regional Airport. The estimated total cost of this project is a little above £12 million. The Government decided to go ahead with it because they see it as a fundamental project which will act as a trigger for further development, both industrial and social, in that region. It also reflects the Government's intention that all regions of the country will have a share in future prosperity. For too long there have been allegations that the west was being deprived of needed investment, and I am using the word "west" in the broadest possible sense. Proceeding with this project will show the Government's intention of accelerating development in the lesser developed areas.

The adequacy of facilities at the three State airports is kept under continuous review by Aer Rianta and my Department so that any improvements necessary to cope with traffic growth, with changes in aircraft types proposing to use the airports, as well as with safety, security and general accommodation needs are introduced in good time.

A provision of £2.6 million to meet the cost of constructional and other capital works at the three State airports is being made available for 1982. The main projects to be carried out this year include the provision of additional car parking facilities, improved cargo facilities, provision of new accommodation for the training of foreign students in aspects of airport maintenance, additional accommodation for Customs staff and the acquisition of new fire-fighting equipment for Dublin Airport. Work will commence later this year on a large apron extension to provide additional parking space for B 747 aircraft at Shannon Airport and the work is expected to be completed early in 1983. Two new fire tenders will be ordered during the year to replace existing vehicles which are coming to the end of their useful life. Improved standby plant facilities are being installed on the main runway to provide increased reliability to meet present-day requirements at Shannon.

As regards Cork Airport, the major projects include the completion of invalid lifts and toilet facilities, for disabled persons, additional standby plant to cater for the increased load arising from the expansion of facilities over the past number of years, a new fire tender and an extension to the airport apron for aircraft parking.

Expansion and development of Ireland's ports is essential if we are to meet the demands of our sea-borne import and export trades. The investment in harbours in the public capital programme is designed to meet these demands by providing expanded harbour facilities at the larger ports and by enabling smaller capital works or essential maintenance to be carried out at other ports.

In particular I would like to refer to the decision of the Government that the construction of a deepwater berth as part of the Cork Harbour Development Scheme at Ringaskiddy should be proceeded with. As announced in the budget speech, the Government are providing £2 million to Cork Harbour Commissioners to enable work on this very desirable project to be commenced this year. Work on that portion of the scheme which had already been approved is near completion with the provision of the roll-on/roll-off ferry terminal facility which will be in operation early this summer. The provision of the deepwater berth will enhance Cork lower harbour as an area for the siting of heavy industry. The deepwater berthage will accommodate vessels up to 60,000 tons deadweight and this facility taken in conjunction with industrial land and fresh water availability will put Cork Harbour Commissioners and the IDA in a strong position to attract port-related industry to Cork. The added advantage of the deepwater berth will be that larger vessels now being used in the coal and timber trades will be able to use the port. It is expected that work on the deepwater berth will commence later this year and construction will take two-and-a-half to three years to complete. The employment content will average 75 jobs over the period which should give a needed boost to the construction industry in the Cork area.

Irish Shipping Limited will be undertaking capital investment of the order of £19.5 million in 1982. Of this sum, £16 million is being expended on the purchase of a secondhand ferry, which went into service on the Rosslare-France run on 1 April 1982. This ferry replaces the St. Patrick which has been sold to the Northern Ireland Company in which Irish Shipping Limited have a shareholding and which will be operating the Belfast-Liverpool service.

The remaining £3.5 million represents part of the cost of the lengthening of the St. Killian, fitting additional cabins and other accommodation. The St. Killian is now back in service on the Continental route. I have to express a special interest in the St. Killian because St. Killian himself was a Cavan man. This expenditure by Irish Shipping Limited has substantially increased capacity for passengers and vehicles on the Ireland-Continental route.

The B & I have been experiencing financial difficulties in recent years and turned in losses of £1.1 million and £2.8 million for the years 1979 and 1980 respectively. A loss in excess of £7 million is projected for 1981. The company initiated a series of measures from 1980 onwards involving a reduction in the level of services, a ban on recruitment and reductions in personnel and other economies with a view to improving their position. Despite these measures, the company are in a serious financial position and have taken further steps since the beginning of the year to rationalise their operations. The Jetfoil has been laid up and is on the market for sale or lease. The Cork-Pembroke and Rosslare-Pem-broke services are being operated with one ship only and a buyer is being sought for the surplus ship. As part of their rationalisation programme B & I have negotiated an agreement with Sealink for access to the port of Holyhead by B & I vessels. Unfortunately there had been a delay in the introduction of this service but I am glad that this was only a temporary set-back. I had talks with the Sealink workers, with the company themselves and with Plaid Cymru from Wales where Holyhead is situated, and I am glad to be able to record that the setback was only temporary and that the service is now in existence. I will continue to support the B & I initiative, which should have benefits in more economical use of vessels and saving in fuel and other costs. While I appreciate that Sealink staff may understandably have misgivings about the effects of the proposed new service on the existing Sealink services, I believe that their fears are groundless. B & I will not be increasing their overall frequency on the central corridor nor will they be adding any further capacity. It is generally agreed that development of the service between Dún Laoghaire and Holyhead will be to the benefit of both companies plying the routes Dún Laoghaire-Holyhead and Dublin-Holyhead.

The financial problems of the B & I Company have been examined under the aegis of my Department and I have put forward proposals to the Government on financial and other aspects.

The air companies' capital programme for 1982 involves expenditure estimated at £13.25 million, the major item in the programme being the acquisition of another Boeing 737 aircraft, bringing to 14 the number of such aircraft in the Aer Lingus fleet. The aircraft being acquired is an advanced version, specially designed for long-haul operations and Aer Lingus envisage using it primarily to serve European inclusive tour charter destinations to places such as Greece, Malta and the Canary Islands.

Besides expenditure on the Boeing 737, the air companies' programme includes provision for expenditure on aircraft modifications, spare parts and equipment and aviation-related ancillary activities, including completion of the Airmotive project at Rathcoole, County Dublin. That project is, of course, making a significant contribution to the creation of high-level-technology-related employment in this country. At present, the Airmotive project employs 220 and when in full production will employ 600.

Because of severe losses on their North Atlantic operations, the air companies have made a detailed case for additional equity investment. As I pointed out in reply to a parliamentary question on this subject on 30 March last, a thorough examination of the Aer Lingus application, which was initiated by my predecessor with the agreement of the board of Aer Lingus has now been completed and is being brought to the attention of the Government.

The Government's attitude towards public transport in Dublin is one of encouraging its use, as evidenced by the additional moneys allocated in the budget to the CIE subvention, which will avoid the need for further fares increases. My Government colleagues and I are convinced that the increased use of public transport is in the overall interest of inner city residents, members of the city's business community, and commuters generally.

This objective is currently being pursued by the Dublin Transport Task Force, the non-statutory interim body which will be replaced by the Dublin Transport Authority. I will be bringing legislative proposals for the authority before the Government shortly. I plan to introduce the necessary Bill before the summer recess, and to establish the authority before the end of the year.

The use of public transport is being promoted principally by the implementation of bus priority measures, by the introduction of new buses into CIE's fleet, and by the discouragement of all day parking through strict enforcement of the parking regulations and through conversion of free on-street parking spaces to metered short-stay spaces. Pedestrianisation of selected streets or precincts is a further measure which can be employed to make the best use of the street network for both pedestrian and vehicular traffic.

Improvement and extension of suburban rail services is also in hands. I have already mentioned that the electrified Howth-Bray line is expected to be in operation by late 1983. Services have been provided in recent months from Connolly Station to Blanchardstown and points beyond as far as Maynooth, and I would hope that all of these developments will divert commuters from car travel to public transport.

I would express my belief that a continued high level of investment on our transport facilities and infrastructure has two highly desirable effects. At a time of economic difficulty such as we—together with the rest of our trading partners—are experiencing at present, the contribution of transport to maintaining employment and economic activity generally is significant. In addition, it is only by having the infrastructure in place that we can extract the maximum benefit from the up-turn in the world economy which we hope will not be delayed for too long more.

I have referred already to the reorganisation of the posts and telecommunications service. I have been working on the preparation of the legislation and the work is nearing completion. I have had exhaustive discussions with the officials of my Department and I have also met the chairmen and executive officers of the boards. I am convinced that with the amount of effort they are putting into the establishment and development of this departure there is a very bright future for both the postal and telecommunications services. Many developments of interest in the postal services of other countries have been studied. I know that the chairman and chief executive have some very enterprising ideas about the development of the service. They have ideas on electronic mail and on greater use of sub post offices, both from the point of view of the savings bank operation and even usage in connection with the Department of Social Welfare. They have studied the effects of the setting up of independent boards in other countries. This has already happened in the United Kingdom, Canada and Australia and we have through their studies the benefit of the experiences of those countries. These people have dedicated themselves with such zeal, enthusiasm and thoroughness to the task which was given to them as chairmen and chief executives of the interim boards that there is a particularly bright prospect for the two boards.

We will have an opportunity for further discussion in the House when I bring in the very important legislation setting up these boards. It will be long and complicated but I am sure that at the end of the day the discussion will be to the benefit of the boards.

I mentioned that I attach particular importance to discussions, agreement and arrangements with the existing staffs on both the postal and telecommunications side. There are no problems which are totally intractable and which cannot be solved through patient, understanding and sympathetic negotiation between the two sides. There will be a guarantee on my part as Minister, acting for the Government, that the conditions of service will not be changed to the detriment of anyone working in the Department.

Could the Minister say when the legislation will be introduced and the date of vesting?

I have indicated in general terms in the course of my speech that I intend to introduce the legislation during this session and I referred to autumn as the time of the vesting day. As the Deputy knows, it is not wise to be too specific.

Will it be during 1982?

Yes. Tá súil agam go bhfuil sé léirithe agam anois go bhfuil an dá Roinn atá faoi mo chúram gníomhach chun bun-structúr, fo-structúr, a fheabsú agus a chur ar fáil. Tá a fhios againn go léir go bhfuil fadhbanna faoi leith againn i láthair na huaire i gcúrsaí eacnamaíochta, ach tá súil againn go mbeidh an bun-structúr sin réidh againn nuair a thiocfas feabhas ar chúrsaí eacnamaíochta sa Eoraip agus sa domhan, mar níl aon neamhspleáchas ann ó thaobh chúrsaí eacnamaíochta. Tá súil agam go mbeidh an post agus an Bord Telecom reidh chun feabhas a chur ar na seirbhísí san dá chuid sin den Roinn Poist agus Telegrafa. Ó thaobh an Roinn Iompair de, tá léirithe agam chuid mhaith de na hoibreacha atá ar siúl againn chun feabhas a chur ar an taobh sin de shaol eacnamaíochta na tíre.

I listened with great interest to the Minister's comprehensive speech which was most informative on a wide variety of topics. I had hoped for more of a philosophical input into the background to the budget which was presented to the House on 25 March. Perhaps it is understandable that there was not a high philosophical content in the Minister's speech because there appears to have been a lack of any philosophy whatever in the thinking regarding the budget which we are debating now.

I should like to remind the House that during the seven months when the Coalition Government were in office between June 1981 and February 1982 a new word had entered the vocabulary in Irish political life. Many people used the word "realism" to describe the policy the Coalition Government put in train. It was an extremely new and not an easy concept to live with because for four years before June 1981 we had a kind of economic fantasy land where realism was a word that was kept firmly outside the door. When the Coalition Government came to power in June 1981 one of the first things they had to tackle was the lack of any kind of reality on the part of people who had been given a licence by the politicians to get away with any demands they made. In June 1981 it was one of the most difficult tasks for the Government to bring back the concept of responsibility.

The Minister used a new word to describe that sense of realism. Other words were used by Fianna Fáil also such as "defeatism" and "fatalism". The actions of the Coalition Government were described as "economic sabotage". Certainly Fianna Fáil did not like the sound of the word "realism" and it is quite clear from the budget we are debating that they still do not like the sound of that word. The Minister's new word today was "demoralising". He chided my colleague, Deputy Molony, for having been infected, as he said, with pessimism so early in life. If this country had the kind of leadership earlier in its life that it had for the seven months when the Coalition Government were in power, the country would be in a much better state.

That realism has been shown to be right. In February the Irish people for the first time were asked to express their opinion. When that election was called on the previous budget it was confidently expected that the people did not want to know about realism and it was thought the Government would sink without trace. Instead, the highest percentage ever of the electorate, 38 per cent, voted for the party of the Taoiseach and the Minister for Finance who had introduced that realistic budget. That was an extraordinary development in Irish political life and one that must give hope and confidence for the future. A very high percentage of the electorate voted for a budget that was generally considered to be the most stern and realistic that any Government ever had the courage to put before the people. The people signified their willingness to face reality and to lay the foundation for economic recovery. By any standards, it was a remarkable answer.

When I was preparing my contribution I went to the files of newspapers and the various commentaries that were written. There was such a consensus about the triumph and the realism of the Irish people that I was overwhelmed but I will quote on extract from a commentary by Bruce Arnold on 27 March when he stated:

It is a measure of the degree to which the general public had been conditioned to realism during the previous seven months that even with the bizarre circumstances in which the 22nd Dáil came to an end, even with the cushioning effects offered by Fianna Fáil to salvage their own campaign, we still ended up as we did with the balance of power held by Independents.

This was just one example of the general agreement of serious commentators that something extraordinary had been achieved by seven months of responsible government. It was a magnificent response by the people to a budget it was confidently expected would be rejected completely.

As a result of that indecisive election which saw an increased number of Independents in this House, Fianna Fáil found themselves in the position of putting a budget before us on 25 March. That is what we are discussing today. There has been time since that budget was introduced to react to it, to discuss it and to judge its effects on our economy this year and in future years.

Before the election and before this budget was laid before us, it seemed that Fianna Fáil finally appreciated that the Irish people had reached a stage where they wanted responsible government. It seemed from the volte face Fianna Fáil indulged in before the election that some voices had finally been heard by the people in Fianna Fáil who made the decisions and that we would have a budget which showed we were getting responsible government.

Debate adjourned.
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