Deputy Yates has thirty minutes.
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).
I will try not to be tortuous. As I mentioned before the Adjournment, the three requests from our young farmers at this time are realistic and easily acceded to. First, there is the extension of stamp duty, which I have already covered, from a two-year period as an ongoing thing, to encourage the transference of farms. Secondly, the ACOT educational and training services have made a specific request to the Department of Agriculture for an allocation of £700,000 now for educational and training purposes to further the technical skills of young farmers on the land, especially those with responsibility for their own farms. I am not aware if there have been any developments on this but it is money which the Minister for Finance should make fully available through the Department of Agriculture.
Thirdly and finally, through the EEC under the farm modernisation scheme, there is provision which can be taken up by member states whereby young farmers under 35 years of age can get 10 per cent extra on their grass where the national government pays £ for £ with the EEC. This scheme has been in operation for many years and successive governments here have failed to take advantage of it. I ask the present Minister to do so as this is a form of revenue and I know the previous Government had great difficulty in getting sanction for many measures which they wanted to implement to assist farmers and the income crisis in agriculture. However, they were obstructed by the EEC and here is a scheme that is easily available already and can be taken up without any obstruction by the EEC. I would ask them to do this as soon as possible.
I have already spoken about the lack of incentive to work, but there are certain areas within the Department of Social Welfare which are ineffective and inefficient and create anomalies. The supplementary welfare benefit system is operated through the health boards and this creates a situation where someone on occupational or disability benefit or any other short-term benefits from the Department of Social Welfare can wait up to nine or ten weeks for the payments to which he or she is entitled. This creates severe and genuine hardship as they are left without any income. Therefore, they are entitled to supplementary welfare benefits and they sometimes go to the local courthouse or health clinic to obtain this money. Not only is this system most degrading to the individuals involved, who are made to feel like beggars, but it also results in further delays in Store Street because they have to check with the health board offices or their community welfare officers to see if this money has been paid and that the appropriate deduction is made. This can result in even further delay. It would be logical and sensible if the supplementary welfare benefit scheme was controlled by the Department of Social Welfare because it would be more efficient, would utilise existing staff better and would ensure that the hardship I have outlined would be eradicated.
Something radical will have to be done about the six day week for social welfare. If people work for five days a week and get paid for it, it is unfair that people who work a three day week should receive the benefit because the social welfare system operates for a six day week. It would be fairer if the same level of payment could be issued for a five day period and this would remove the lack of incentive in this area. People who receive unemployment benefits have to go to their local employment exchanges once, twice or perhaps three times a week or, in rural areas, they go to the local Garda barracks. The employment exchanges are usually very small, dingy offices, inadequately staffed, which means that hundreds of unfortunate people who are looking for work have to queue. Employment exchanges have become unemployment exchanges and are no longer finding jobs. They have become hand-out offices, dole offices and have a humiliating effect even on people who are not receiving unemployment benefit but who go there to make a simple query.
Manpower offices in rural towns are very scarce and not properly run. Albeit with insufficient funds, they provide a one day a week clinic, possibly in a hotel, and are crying out for office space. The Minister for Labour said at Question Time that they cannot find office space in Enniscorthy. I cannot see why the Department of Labour cannot incorporate into the employment exchange facilities to provide manpower offices. This would allow people to obtain their benefits and give them up-to-date information with regard to vacancies arising in different forms of employment. It would also ensure that people who were supposedly drawing money and were not genuinely seeking work would have the opportunity to do so.
Successive Governments have treated the motorist as something of a punch bag. He or she has now reached saturation point as far as tax is concerned. When the present Government were in Opposition they loudly and categorically stated that driving a car was not a luxury and was a necessity for people to travel to their places of employment. We have a very unusual situation in regard to car taxation. It was abolished as a popular voting gimmick in 1977 and was re-introduced amidst loud criticism and yet it is increased again. The old reliables of petrol, LPG, diesel, both red and white, have all been taxed again. Leaving aside the industrial and agricultural usage of these products, which will have an economic effect which I outlined earlier, this increase in petrol is also a savage attack on the motorist. The increase in excise duties, the increase from 15 per cent to 18 per cent on VAT also fairly substantially penalises the motorist.
A major bone of contention, especially among people under 25, is the question of car insurance. People of my age, some of whom did not do a driving test during the period when there was an amnesty and it was not compulsory to do so, find it extremely difficult to get insurance. Naturally enough, many of these people do not drive new cars, they drive second- or third-hand cars which have a value of £1,000 or less. They find that insurance for third-party, fire and theft comes to £400 or £500. Often the value of their cars is almost the value of their premiums, which is totally unfair. When we were in Government we set up a committee to look into this and I would like to hear from the Minister what the up to date position is. For the present Government to introduce a levy on insurance companies which will extract £2.2 million is a signal of the last nail in the coffin of the driver in so far as there is no question that these insurance companies will pay this levy out of their own pockets. Naturally they will pass it on to their clients through premiums and it will be prohibitive for young people to drive because they cannot afford the excise duty on the car, they cannot afford to tax and insure it and, even if they could afford to buy the car, they would not be able to run it.
Though some people argue that the car is a symbol of social status, there is the all-important matter of the motor industry to be considered. Last November I and all other Members of the House received a submission from the motor industry. We were told that in the previous 18 months 4,500 people had lost their jobs in garages, in car assembly plants, in the industry in general. The motor industry is one of the most important among service industries here, but the Government are treating it wrongly. Because motorists have to pay more and more tax, at least the Government should ensure that roads would be kept fit to travel on. Unfortunately, though national primary roads have received substantial financing and there has been some improvement, county roads show a litany of neglect, though this is an area in which local authorities have a statutory function. Instead of embarking on improvements, and I am not talking about road widening or eliminating bends, they are down to filling potholes, and even that is becoming impossibly expensive.
This leads me to the system of financing local authorities, of which there are 87 in the country. Not one of those has a reasonable credit balance, unlike the situation before 1977 when local private rating was abolished. I appreciate that it is easy for this side to criticise the Government for not providing sufficient finance for local authorities, but few will suggest alternative sources of revenue. There are other methods of providing revenue for local authorities without putting an intolerable burden on the Central Fund.
Deputies will be aware of the existence in America and other countries of successfully operated State lotteries through which the taxpayers get relief. These lotteries are professionally run and here they would be a great extension of the Irish Hospital Sweepstakes. I am thinking of something that could provide great prize money, something that could be run by co-operation between the local authorities. The Minister for the Environment should look at this suggestion and perhaps commission a report on such lotteries in other countries. The Prize Bond scheme and other smaller efforts in this direction of saving-inducement have not been successful in any large way. The kind of scheme I suggest would need the right kind of professional attitude, with a good public relations organisation. Large amounts of moneys could be made to the benefit of local authorities for the good of local services. At the moment that money is going into betting offices.
The financial stress has been greater in regard to urban local authorities than county councils. The Department have to provide minimal back-up to county councils but urban councils do not have the ability to raise rates in the way that farmers can supplement county council revenue. The only providers of revenue for urban and borough councils are those who pay water and business rates.
Therefore, a new finance-bearing structure will have to be devised to provide money locally through a system that will be administratively possible. I have been a member of the Municipal Authorities Association since 1979 and at successive conferences I have urged that a percentage of the VAT paid on purchases in urban areas should be refunded by the Revenue Commissioners to the local authorities. Such a refund would be only logical because it would give local people an incentive to shop in their own towns which does not exist at the moment and this has been leading to closures and to a decline in property values. Local councils have been reduced to the status of talking shops, and a scheme of refunds on the lines I have suggested would give some semblance of authority to local councils. I would ask the Minister for Finance to look into this in collaboration with local authorities. Submissions have been sent to the Minister in this regard but there was no response of any significance, and another good opportunity has been let slip.
Still discussing new tax proposals, I understand that before I was born there was an entertainment tax, and though it was difficult to administer and though the character of public entertainment has changed, I suggest that as far as taxation is concerned entertainment must be considered more seriously. A sum of £45 for a bar extension licence is totally inadequate. Publicans do not receive State grants in respect of their premises. They do not provide any service other than pints in comfortable surroundings at reasonable hours. They do not contribute to accidents on the roads, whereas people engaged in bar extensions in discos and night clubs make far greater profits and most accidents on the roads are caused by people who have been drinking throughout extensions until 1.30 a.m. For that reason, a new form of entertainment tax should be considered and bar extension fees should be increased.
Some months ago at a parliamentary party meeting I suggested that there should be methods of tax which had been totally untapped. One was the question of holiday tax on which there has since been action but which I also feel is inadequate. I feel that 10 per cent of a package holiday to any part of the world is reasonable in so far as there are some people who cannot even afford to get to various parts of this country, let alone to various parts of the world. This is a luxury and should be taxed heavily.
Another area in which taxation would be unpopular, but which is worth a mention, is that relating to the whole question of bingo. In my constituency and every other constituency, on five or six nights a week there are buses travelling hither and thither packed with ladies and gentlemen, young people, going to play bingo. I have not been to bingo too often myself, but they are not happy to operate just one card but operate three cards at a time. While I would not like to impose any penal taxation on women enjoying themselves in their spare time after their hard day's work in the house or out at work, I feel that a small tax initially, an admission tax or whatever, should be imposed because the limits of £500 on snowballs are no longer relevant; we are now into big money; it is no longer a charitable small-time operation for philanthropic purposes. Bingo is big business. It is a luxury, a hobby, an entertainment, and should be taxed. This is one area which would not take food out of people's mouths or clothes or footwear off people but would provide revenue to the State.
In summary, as I outlined earlier, there have been many economical and political changes over the last number of months. We must remember that, whoever is in Government, we have the largest growing population in the EEC, 2 per cent in the recent census. We have 68,000 school leavers joining the job market every year. The Government have a statutory obligation to provide health services, protection services such as the Garda and the Defence Forces, and administrative services. They are also obliged to provide a framework for educational services, to provide young couples with roofs over their heads and to provide jobs. Politicians and our system of administration are, at times, too parochial and too political. Now is the time for a national resurgence plan or another national economic plan with a combination of many Departments, all based on indigenous industries in the areas of agriculture, forestry, fisheries and tourism, with an input in regard to energy, production and market research. I am informed by people in private industry that while CTT are doing a good job there are untapped markets for our products and that the hard-nosed businessman who makes it his business to travel all over the world to sell his products does find markets for them. This should be part of our national economic plan. The public service badly needs to be overhauled. We have 166 TDs who are all involved in untying the knots of red tape created by the civil servants. While one accepts that there is always a need for fair and proper administration, it seems that it has become completely top heavy when we are dealing with 300,000 civil servants.
I would also agree with previous Ministers and with the present Minister that it is not possible — and this is shown up particularly in the case of Britain — to get all the economic factors right at one time. One cannot reduce unemployment, inflation and interest rates at one time.
I would remind the Deputy that he has approximately two minutes left.
The emphasis should be first on getting the economic background right by reducing interest rates and inflation rates, by cutting the budget deficit, by cutting our dependence on foreign borrowing so that we will have the moneys in future to prepare for this type of economic plan. Then we would have a firm base on which to plan our economy so that it will grow.
Finally, especially in view of the events since the election when certain Members of this House have been purchased with a high price and when certain other pressure groups have been given in to regularly, I am very much afraid that the only party to provide the real, courageous, tenacious type of Government, regardless of the whims of the people, are Fine Gael. In the future it will be our Government that will rectify the situation by taking the unpopular decisions that have to be faced.
Is mian liom anois glaoch ar Theachta Corr ar ocáid a chéad oráide.
The debate to date has been wide-ranging. At this stage it is difficult to find something new and original and significant to say. At a time when we have serious economic and social problems it must be the duty of every Member of this House to be constructive, just as Deputy Yates has been, and not engage in political point-scoring.
Widespread unemployment and the continual, almost daily, increases in living costs are affecting a large section of our people. Therefore it behoves the Dáil to show a deep concern and an intense desire to come to grips with the various social and economic problems which affect our people at this stage. Otherwise we do a serious disservice to the democratic process and add to the sense of disillusionment which an increasing number of people appear to have in relation to the deliberations in this House.
The Taoiseach said this morning that our country, in its people and in its resources, had greater potential for growth than any other country in the EEC. I would agree completely with that optimistic statement. But before such potential growth can become a reality we need a great deal of investment and we need work for our people so that Irish goods can be produced in great quantity and sold at a competitive price on the world market. It is a function of Government to fashion and guide the economy so that the potential may be achieved. I see the budget as one of the instruments in the process of developing the economy towards that ultimate potential.
The greatest single challenge facing us as a nation is that of unemployment. I agree with the Minister that many parents are worried about employment prospects for their children. People are ready to make sacrifices, or at least they can be motivated to make sacrifices so that jobs may be created for our expanding population of well-educated and ambitious young people. I am in total agreement with the Minister that we must strive continuously to provide job opportunities for all our young people who want to work in their country. I would go further and say that persons or organisations, be they unions or employers, pursuing policies that hinder job creation or that are not conducive to job creation should be condemned as being anti-national and lacking in real patriotism, something which we greatly need at present.
We cannot isolate ourselves from the past but no social phenomenon here or throughout the EEC has hit as hard as the widespread unemployment we face. It is destroying individuals and hindering the development of family life. Our first responsibility must be to combat unemployment and strive for a society in which everyone who can work, be they young or not so young, male or female, has an opportunity of so doing. If this budget is a landmark on the road to creating such a society we will all rejoice irrespective of what political pigeon hole we place ourselves in. I am not at all convinced that this budget does enough to keep people in employment or to create new employment.
Job creation is a very costly business. In the course of the last 15 or 16 years successive Governments allocated substantial sums to the IDA for the creation of jobs in the manufacturing sector.
Associated with IDA developments were large investments by local authorities in the provision of services such as roads, water, drainage and so on to such centres of employment. It is discouraging to note that despite such investment employment figures are decreasing. This is occuring at a time when public funds are curtailed. There must in future be a closer partnership between public and private sector investment if sufficient funds are to be made available for the creation of jobs on a scale never before achieved. In this regard, there is much wealth which is not used productively. In the circumstances of today it would be in the national interest to ensure such wealth is put to better use.
There are strong arguments against the taxing of wealth and capital. In the context of a free market economy such as we have, it is the accumulation of wealth which creates industries and commercial enterprises which generate jobs, income and more wealth. If capital taxation eroded the nation's capital base without providing some alternative build-up of capital, such taxation would be counterproductive. However, a tax on non-productive accumulations of wealth would free capital for productive use rather than reduce the nation's store of wealth-creating assets. Investment is essential if a vigorous programme of job creation is to be put underway. There must be investment not only by the State and from overseas but by those Irish people whose wealth at present is not producing more wealth in the interests of the unemployed. I hope the confidence which the Minister for Finance expressed in his budget statement regarding employment prospects for this year is well founded and that his strategy will result in real jobs and not just jobs sanctioned on paper.
One aspect of the budget I do not agree with is the support it gives for selective local government. I refer to the £20 million being allocated to Dublin Corporation to enable them to maintain their level of services and employment in the present year. I accept that Dublin has major problems in the sphere of urban decay and blight and that these are social problems, but the £20 million referred to in the budget does nothing for inner city development. It is essentially a rate subvention to the corporation which will increase its rate income by 45 per cent over last year's figure while Cork and other rating authorities must endeavour to survive on an increase of 15 per cent. All local authorities have experienced financial difficulties over the last few years but the problems of urban centres have been particularly severe. In this regard, I am hopeful that the appointment of a Minister of State with responsibility for urban affairs will result in a new awareness of the financial needs of all major urban centres. Their problems have arisen from the fact that inflation from 1979 to 1981 exceeded 60 per cent while the increase in rates permitted, including the allowance for buoyancy, amounted in the same period to just over 47 per cent. This has resulted in a financial crisis for local authorities. I can understand the Minister's willingness to come to the aid of Dublin Corporation in their financial straits but Exchequer funds should be distributed in an equitable manner so that pro rata assistance would be available to all units of local government which are carrying progressively increasing deficits on their current accounts.
Let us not lose sight of the fact that the once-off grant to meet the immediate needs of Dublin Corporation is not the solution to the endemic financial crisis which has descended on local government. It is easy to stand here and criticise but we must face the fact that the system of financing local authorities, pursued by the present and previous Governments which was introduced under the 1978 Act, has not been a success. An answer must be found. It may be unpopular but it lies in an independent, permanent and progressive source of revenue for local authorities. Some Government, sooner rather than later, must face the problem of financing local authority units and restoring to them not only financial autonomy but also responsibility for their own actions.
The budget contains £1 million to install facilities in sub-standard corporation houses in Dublin. In Cork there are well over 1,000 sub-standard houses and we would dearly love to bring them up to a standard in keeping with the other corporation houses. We would need help from the Exchequer to do so.
There is reference to decentralisation in the budget and the Taoiseach referred to it this morning. I hope this concept will be pursued vigorously in the interests of balanced development across the country. There should be a national effort to decentralise the administrative functions of government and have every-day matters which affect the lives of people dealt with at local level. For example, is it really necessary or desirable that all applications for house loan approvals, passports and so on should have to be made in Dublin? Anyone in the House who is a member of a local authority could provide a list of services which are operated in Dublin but which could be provided at regional level with efficiency and greater satisfaction to the people. We have an under regard for centralism. It is something we inherited from the British and we should look at it again.
The Taoiseach mentioned this morning that he would take steps to ensure that the policy of decentralisation would get underway. I wish to take this opportunity to inform him and the Minister that we have in Cork an ideal city centre location for office block development. Furthermore, Cork has the environment which a decision-making sector needs, with its good communications, third level institutions of education and it is a centre of commerce. Indeed, one major development on Merchant's Quay is being held up at the moment and if we could get a commitment that perhaps at some stage in the future a Department of State or semi-State body would move in that direction, we might see it take off very soon with resulting jobs for workers in the construction industry and eventually the transfer to Cork of a semi-State body.
The Minister in his budget statement mentioned that extra taxation will be collected as equitably as possible with the greater burden imposed on those best able to pay. I am not at all worried about those in our society who are financially well off. They are well able to look after themselves, as is evident from the fact that wealth is distributed so unevenly amongst our people. However, I am worried about the imposition of this budget on the resources of middle-class people who are the backbone of this nation. Invariably they house themselves, carrying the burden of a large monthly mortgage repayment. They pay their VHI and they qualify for few — if any — of the State handouts. As a result of the changes in the income tax bands many middle-class people will find themselves paying more in direct taxation at the end of the day and the State will collect more from them in taxation than they would have paid if the much condemned VAT on clothing had been accepted. This will result primarily from the reduction in the range of the 35p tax band and the resultant substantial increase in the number of people who will find themselves in the 45p tax band. The middle classes are the new poor, and the Minister for Finance should recognise their courage, initiative and enterprise and help them in every possible way. This budget does little for that section of our people.
(Waterford): As a Workers' Party Deputy representing the Waterford constituency I did not come into Dáil Éireann on election expecting a socialist budget from Deputy MacSharry, Minister for Finance, any more than I or my Party anticipated such a Budget from Deputy Bruton on 27 January last. I would like to make clear at the outset the sort of budget we would consider acceptable to the vast mass of the working people of this country: it is a very far cry from what we have seen from both Fianna Fáil and Fine Gael and Labour Coalition. Both budgets failed to face up to the constantly reiterated need for sweeping tax reform. Both budgets shifted the tax base towards indirect taxation, a form of taxation that my party have opposed consistently and will oppose in the future. Neither budget contained proposals to redress the scandalous neglect of capital and property taxation as a potential source of tax revenue. Above all, neither budget offered any hope that the relentless rise in unemployment would be reversed in the foreseeable future. Our stance in relation to these two budgets has been to salvage what we could for the working class, given that the two major conservative groupings in Dáil Éireann have resolved to place the burden of the economic crisis which undoubtedly we face at present on those who can least afford to pay. Our stance has been to soften the blows struck against the living standards of the workers and the weaker sections of society in truly savage and unjust budgets that have been placed before the Dáil this year.
My colleague, Deputy Sherlock, voted against the Coalition budget last January and in doing so made sure that the voices of PAYE taxpayers, PRSI payers and the economically weak were heard in this Chamber. The subsequent budget introduced by Fianna Fáil, however, involved some minor steps towards alleviating the burden on ordinary working-class incomes. Examples are the dropping of the reactionary proposals to raise the prices of some of the most staple food items such as butter and milk, the proposed 20 per cent tax on PRSI benefits of the recently unemployed and the 18 per cent VAT rate on clothes and shoes. Objectively speaking, that budget made a slight improvement in the prospects facing workers in the weaker sections in this year of recession, but we in our party are under no illusion whatsoever that it was a workers' budget, far from it. Our subsequent stance in pressing for a reduction in the unjust Coalition-imposed PRSI levy on the PAYE taxpayers is indicative of our intention to go on fighting for a fair sharing of the burden imposed on the country at large by the present economic crisis. We have pressed on with that fight in recent weeks and we will go on pressing for fairness in budgetary matters in the weeks and months to come, if this Government stand.
It does not surprise me to see the various attempts that have been made in recent weeks and months to distort and misrepresent the Workers' Party's stance on the budget. Indeed, certain Labour Party Deputies have attempted to peddle the ridiculous idea that my party were somehow responsible for the raising of PRSI levies, a ridiculous proposition when one considers that the Labour Party were one of the parties responsible for introducing this measure in the first instance. Other spokespersons from the Coalition parties have attempted to portray our budgetary stance as being opportunist without any regard for the serious underlying problems which afflict the economy, such as the balance of payments deficit and the intolerable level of foreign debt which has been amassed in the past eight years. Since the 1974 budget, introduced by the Coalition Government, successive administrations have attempted to maintain the illusion of prosperity under capitalism by more and more borrowing to pay for current account expenditure. Both the Fianna Fáil and Coalition Governments have refused steadfastly and continued to refuse even to contemplate the policies necessary to lay the foundations for real prosperity through a thorough restructuring of the economy, to raise production to the levels necessary to maintain and improve our standards of living and to provide for the real job creation, housing and infrastructural needs of our rapidly growing labour force.
In 1977 my party published proposals which showed in a practical and concrete way how the necessary levels of job creation could be achieved and how our output and living standards could be raised at the same time. This was to be done through a socialist approach of planned expansion of State enterprises, of companies such as Bord na Móna, the ESB, Irish Shipping, Aer Lingus and the Sugar Company, as the engine of growth in the economy. In out view, borrowing should have been contemplated to finance productive investment, indeed real investment, which would have produced a return to alleviate the burden on taxpayers. Around 1974 the Fianna Fáil Party published their proposals. To coin a phrase, "planning" was the "in" word in 1974. It was in fashion. However, these proposals differed fundamentally, completely and utterly from ours. They relied instead on the private sector as the engine of growth, despite the massive weight of evidence existing even at that time through numerous official reports testifying to the inefficiency of Irish gombeen private enterprise.
This reliance essentially and the allocation of yet more public funds to this sickly sector of our society laid the basis for the enormous growth of foreign indebtedness that followed. Incidentally, Fianna Fáil were only continuing a policy in regard to foreign borrowing which was started by the National Coalition in 1974. However, the unshakeable faith of the conservative parties in private enterprise as the engine of growth was completely misplaced. Despite the so-called investment level and the size of Japan, the inefficient, ramshackle, private enterprise economy proved that it could not meet the challenge. The engine in effect and in reality seized up. As a result we are left with an economic crisis approaching the proportions of that of the fifties with unemployment rising towards 150,000, with economic stagnation and a huge foreign debt.
Despite all this and despite the recent evidence from the Telesis report — which incidentally was also released by our party and suppressed by Fianna Fáil and this provided further testimony to the failure of the private enterprise economy — it seems that the Fianna Fáil Government have learned none of the lessons of the past eight years. Indeed, within days of his appointment as Minister for Industry and Energy, Deputy Reynolds was professing his faith in the ability of small industry entrepreneurs, aided and cossetted no doubt by more handouts from State agencies, to meet the daunting economic challenge that faces us now.
For my party, full employment is and will continue to be the number one economic priority. Well-paid, secure jobs can only be created for all our people by an economic plan that puts the needs of society before the greed of private enterprise, it is regrettable that the Taoiseach who before his election professed his first priority to be job creation did an about-turn within hours of his election by stating that his first priority was the North. Be that as it may, my party will submit their proposals for employment creation and real economic development to the Government for inclusion in their forthcoming economic plan, but in doing this we will be under no illusions. From my experience during the past few days while the Dáil has been meeting, I have no doubt about the capitalist nature of this forthcoming plan, just as our party had no doubts about the capitalist nature of the budget last March. My party entertain no starry-eyed hopes that the Fianna Fáil plan will provide the answer to the chronic balance of payments and debt difficulties in which we now find ourselves. These problems will only be solved in a manner acceptable to the working people through the alternative approach to planning that my party espouse. The only other answer is the non sequitur of cutting the living standards of the old, the poor and the weak proposed by the Labour and Fine Gael Parties.
Our budgetary position springs from our perception of the real solution that must be found to the economic crisis. It is on the basis of this alternative that we have pledged ourselves to fight the monstrous attempts of the conservative parties in this Chamber to solve the economic crisis by making the working class pay through lower living standards and continually rising unemployment. That was the message of our manifesto which we placed before the people in the recent general election, and the result has proved that our perception of the situation as it exists has not been misconstrued or misplaced.
We accepted the aim of cutting the budget deficit, as did the other parties. But, contrary to the other parties, we showed with the aid of detailed costings from the Department of Finance, how this could be done in a fair and just way by the last resort to capital, property and wealth taxes totalling £230 million. It is interesting to note that these detailed alternative budget proposals provoked no response whatever from any other party either during the general election or subsequently. The deafening silence of Deputies on these proposals would appear to indicate a unanimity across the floor of this House that the interests of land, capital and property are and must continue to remain sacrosanct within Irish society. My party would welcome comments on these proposals during this debate, particularly from those Deputies who describe themselves as socialists. In our budgetary stance during the coming months we fully intend to fight for the principles put forward in our election programme.
We recognise that the Fianna Fáil budget, while softening slightly the blow against working-class living standards, has incorporated a temporary device of bringing forward money from 1983 in the form of accelerated corporation tax and VAT on imports at the point of entry, money that will have to be found again through new taxation measures in the 1983 budget. We do not accept Fine Gael's attempts to convey the impression that these sums will not be raised in 1982. We fully realise, however, that Fianna Fáil's resort to this expedient of bringing forward money will mean that taxpayers will be left with a bill of the order of £170 million in the next budget. The Workers' Party are serving due notice that we will be fighting to ensure that this money will not be taken from the pockets of workers and the economically weak.
We will continue to campaign for the implementation of our budgetary proposals to ensure that those who can afford to pay will do so. I am sceptical that this campaign will receive the support of Deputies but my party are confident that it will receive the support of workers outside this House and that, to us, is all important.
I welcome the opportunity of addressing the House during this important debate. I congratulate the Minister for Finance on his appointment and wish him well in the extremely difficult task of administering the nation's finances. I have no doubt that he brings to his new Department the same high degree of enthusiasm and capacity for hard work which has been the hallmark of his political career to date.
The budget and its associated debate unquestionably represent one of the most important functions of this House, the effects of which have far-reaching consequences for our people and the future development of the nation. In the preparation of the budget statement the Minister should endeavour to strike a reasonable balance between the short-term domestic needs of our people and the long-term capital proposals on which our future economic development depends. The Government of the day, and particularly the Minister for Finance who has the responsibility in this area, should have the capacity to get their proposals accepted in the House. This is the primary function of Government and the fact that we are debating today a second budget in the course of a few months must create an awareness, not only in the House but outside as well, of the need to have a stable and secure Government capable of administering the nation's affairs and having their proposals for dealing with finances accepted.
The fall of the previous Government on this very issue was the last fatal move of an administration which for seven months killed the spirit, the hope and the capacity of our people to recover from the present economic recession. Their budget was unnecessarily defeated because the authors did not show even slight regard for the human needs and feelings of the people. It was a budget which put book-keeping before people and, more serious still, it undermined public confidence, especially when the then Taoiseach saw fit after his defeat to barter some of its major proposals for political gain during the election campaign. I do not propose to dwell any further on the actions of that Government. That is now political history.
In this his first budget the Minister for Finance has displayed considerable sensitivity to the short-term needs, particularly of the more deserving sections, while at the same time taking positive steps to deal with the serious and pressing needs of our economy. He has recognised the needs of those who are genuinely dependent on State support — the old, the widows and the disabled. He has made provision for those who are genuinely unemployed, the real victims of this recession. I wish he and the Government could do more to eliminate some of the abuses of those services. I say to the people that Fianna Fáil recognise their needs and will legislate to maintain their living standards in so far as our resources allow us to do so. We know there are two extremes in our society, the very wealthy and the extremely poor. I am convinced that our actions in Government during the next four or five years in dealing with those pressing social problems will prove our capacity to create a just society.
Many people fail to recognise that there is a new poor in this country. I am referring to what is called the middle income group. They carry the maximum taxation burdens but they receive little in return by way of State services. I welcome the Government's decision to restructure the entire taxation system when the report from the Commission on Taxation becomes available in the near future. I know that people outside this House will welcome whatever action may be taken by the Minister.
The Financial Statement we are discussing today identifies the urgent problems facing the economy and the efforts necessary to resolve them in the short-term. There can be no doubt that the major problem is unemployment. This calls for the united effort of all Members of this House and it also demands the understanding and co-operation of our people in accepting what Government action may be necessary to deal with this very serious problem.
While there is a genuine desire and commitment in this House to deal with the problem, I regret to say there is no great evidence on the part of the organised community to accept the disciplinary measures necessary for the success of the programme. As legislators we have the duty to administer firmly the affairs of the nation, to ensure that through long-term planning our economy is developed and that in the process our great human resource, the men and women, the boys and girls of this country, are given the opportunity of contributing in that work through gainful and productive employment.
As politicians we have not, and are not, displaying sufficient courage in this area. I believe we have failed so far to get the public to accept and recognise the basic simple economic fact that the only real way forward is through hard work, developing to the maximum our national resources and developing our industrial base through increased output. Anyone who thinks otherwise is living in a fool's paradise. We are the people who have created this artificial paradise and I do not blame those who seek refuge in it when we have failed to provide an alternative. We speak about abuses of the system but we have failed to take positive steps to eliminate those abuses.
Recently I listened on the radio to a report of a seminar entitled "The Alternative to Employment". It is frightening to ponder on the title. The fact that people are compelled to think along those lines is an indication of the seriousness and the extent of the problem we have at the moment. It is true that Governments in the future will have to plan for healthy recreational opportunities for our people. In this budget the Government have recognised the problem and have made provision for it. It is also true that in a period of high unemployment we should accelerate this programme particularly for young people, but in my book that can never be a substitute for employment.
The appointment by the Taoiseach of the Minister of State, Deputy Geoghegan-Quinn, to this area of responsibility is to be welcomed. She is following in the footsteps of the Leas-Cheann Comhairle, who made a tremendous contribution to the development of recreational facilities for young people. I do not know if it is in order to acknowledge the contribution of the Leas-Cheann Comhairle at this time but I should like to put on record our congratulations and thanks to him. I am sure I am expressing the views of many thousands of people. Properly developed, the scheme would be of immense benefit to young people from the point of view of health. It should be viewed in the context of the provision in the budget for the enforcement of law and order. The entire question of law and order must be top priority for any Government and for any Minister for Justice. The likely continuation for some time of high unemployment makes it all the more imperative for the Minister for Justice and his Department to take whatever steps are necessary to safeguard the interests and the property of our people. I am very happy to acknowledge the contribution which the Minister, Deputy Doherty, is making in this area. Since he came to office a short time ago he has taken the initiative in coping with this pressing problem.
When it comes to discussing the budget proposals, the subject of taxation is given high priority. There can be no doubt that there is a strong public demand for the reorganisation of the taxation code. The increasing burden on those who are working, the disincentive to work which is inherent in our welfare code, and the growing imbalance between those in productive and service employment calls for immediate and urgent action. I urge the Minister to ensure that there is no avoidable delay in bringing forward those proposals to ensure that within the shortest time a fair and equitable taxation system is in operation, and is seen to be in operation.
I believe the majority of taxpayers would condone even the present high level of taxation if they were satisfied that the State's effort in spending their money was getting a return by reducing unemployment or assisting in the economic development of the State. While we all welcome the Minister's intention in this area, and I am satisfied he will leave no stone unturned to ensure the system is brought into operation at the earliest opportunity, I must say that he is embarking on an extremely difficult course because this is an area in which we have not seen very much progress to date. I am satisfied and confident that the new Minister will introduce whatever legislation is necessary to tackle this very urgent problem.
There is no acceptable or justifiable reason for allowing a continuation of a situation in which it is more financially rewarding to be idle than to work in a productive job. I have no hesitation in saying that the people who benefit from such an arrangement would prefer to be given the opportunity to work because they realise that in the long-term they and the taxpayers will have to meet the cost of this operation.
I mentioned earlier that we should concentrate our efforts on the creation of productive employment. That leads me to our failure to develop in an organised way our greatest national asset, the land. Its potential both for the purpose of retaining the maximum number of people and farming families on the land and, of equal importance, its potential to create productive jobs in off-farm employment, in the processing industry, have not been fully exploited. This area has been neglected over the years. While I do not wish to apportion blame, I can never understand why we failed to develop our agricultural processing industry.
We have the natural resource — land — and the expertise and knowledge to produce the goods. Yet, for some strange reasons when we get to the factory floor we seem to be incapable of making a success of that end of the farming operation. This area deserves attention and close scrutiny from people at Government and semi-State levels to ensure that in the years immediately ahead it will be successfully tackled.
In a previous contribution I said that as far as agriculture was concerned we should get back to the drawing board and make the agricultural industry the base from which all other developments would evolve, and I hope our proposed plan for future economic development will recognise this important economic fact. I was disappointed that the previous Minister for Agriculture instead of providing incentives for the industry at a very critical stage of its development, reduced the level of grant assistance for land development and other essential services. I am pleased this Minister has restored that situation and restored the level of grants but I ask him to ensure that the costings of those schemes will be updated and brought into line with current costs because some of them are almost three years out of date. This need for an updating of the costings has resulted in almost ceasing land reclamation and land development and has undoubtedly contributed further to unemployment as far as the agricultural service industry is concerned.
I can quote a glaring example of the unemployment which can result from a recession in the agricultural industry. In my constituency there is an industry which produces clay-ware pipes for drainage purposes, in the Swan area, run by the famous Fleming family. Because of the cut-back in agricultural grants and the reduction in economic activity and reclamation works in that area, that factory had to close its doors for a considerable period over the past few months. That is why I make the point that agricultural development and progress in the agricultural industry should be of general interest to people outside farming because in a small economy such as ours we are interdependent and if there is a serious recession in the agricultural industry that reflects throughout the economy in job losses.
I was pleased to note in the budget statement that the Minister reconfirmed the Government's proposals to decentralise Government Departments. While, regrettably, there is no immediate proposal to locate any Government Department in my county, Laois, I would ask that the situation in Laois be recognised by the Minister and the Government. It will come as a surprise to many people in this House to learn that in less than one hour's driving time from where we are sitting in the county of Laois you would drive through one of our most deprived counties. That is not immediately obvious to the ordinary commuter driving through the county, but there are now sufficient facts and figures available to the Government and Government Departments to indicate that we have one of the lowest per capita incomes in the entire country. Therefore, there is a need for Government action to redress that situation. I propose to raise this matter again under a different heading in the not too distant future, I hope.
I am very pleased that my close friend and colleague, the Minister of State at the Department of Agriculture, Deputy Cowen, is present for this debate. To the extent that he has responsibility for the disadvantaged areas and the designation of such areas, I do not have to tell him the position because I know that already he is fully aware of the situation in the Laois-Offaly constituency. He recognises the extent of the problem in our constituency. I also recognise the difficulty of his task in ensuring that our area is designated for the higher rate of grant.
Every effort should be made to increase the productive base of the agricultural industry in our constituency and to maintain, and if possible improve, the incomes of the farmers in those disadvantaged areas. We have all watched with dismay the disappearance of so many small family holdings. This contributed in no small way to the serious imbalance between the rural and the urban communities. This imbalance has arisen because as legislators we have allowed it to happen. It has created a demand for infrastructural development in the organised areas which we are not now capable of meeting. We cannot redress that situation in the short-term. The Minister has a strong and positive committment to rural development. I urge him to ensure that Government action and Government policy in the future will arrest the decline in the rural population and redress the imbalance between the urban and the rural areas.
For the past few minutes I have endeavoured to cover the areas of the Minister's statement which are relevant to the constituency I represent and to the people of Ireland. I hope my contribution has helped to highlight some of the urgent and pressing problems which face us at present. I hope my comments on public acceptance of Government legislation, perhaps unpleasant legislation, will be taken by the people as being in their best interest in the long-term.
I should like to preface my remarks on the Financial Statement made by the Minister at the end of March by showing how we have arrived at the state of play in which we have had four budgets before the House in just over 12 months. We had the budget at the beginning of 1981 which was to set the pattern for the year. It was presented in the light of the 1981 June election and it had to be a popular type of budget, which it probably was. It did not achieve anything as it catered for a nine month economic year. When the previous Government took office last June they realised that our finances were due to run out towards the end of September or October and that the necessary finances would not be available to enable the various public services to be continued, and they had to bring in the July budget.
At the time they recognised that it was absolutely necessary, and the people realised that what the Fianna Fáil administration had been doing since 1977, and in particular in their last 18 months in office, represented total economic mismanagement. The previous Government got the message across to a fair extent about the necessity for getting our financial affairs in order and we had the January budget. Unfortunately for the country, it did not go through this House and we had a change of Government in late February. We now have a fourth budget before the House.
In considering the budget before the House we have to make some comparisons with the January budget. Various economic decisions were taken in that budget to which the present Minister has adhered. There are some aspects of this budget which can be welcomed or recognised as making good economic sense which were in the previous budget. There are also certain elements in this budget which were not in the previous budget and were put in to gain a more popular image for the budget. There are certain things in the budget which lead one to wonder what the Government's intentions are in relation to sorting out the various problems which the country faces, namely, getting our finances into order, getting down our unemployment figures which unfortunately have increased to a very great extent, providing more jobs for the various unemployed groups and ensuring that the economy is stable. I hope to deal with several aspects of the budget statement.
It is important to remember that the Government were in office from 1977 to the middle of 1981. With a 20 seat majority they failed to make the basic sensible economic decisions which should have been taken at various stages during that period, and in particular in the 18 month period prior to the June election of last year. They knew there were problems. Many Deputies, particularly some of their back-benchers, recognised the fact that they could not continue in that way. But with elections forthcoming, bearing in mind that there was a Cabinet comprised of — it seemed at times — either incompetent or irresponsible individuals in relation to how public money was being spent, basic economic decisions were not taken. They proceeded with a sort of "spend and be damned" image giving the impression there was plenty of money outside the country that had only to be tapped from time to time to keep various services going. This is unfortunate because it puts off the day when we can avail of the expected upturn in economic growth. This means also that we shall not be in the position we would have been in had those basic economic decisions been taken by the present Fianna Fáil Government or by them when in office prior to the June election last year.
It is unfortunate that the previous Government fell because to a large extent they had got across the message of the very serious economic problems confronting us. There is no point in our fooling ourselves. At times previous Government spokesmen were accused of being prophets of gloom and doom. I put it to the House that they were telling the truth, merely informing the public of that basic fact, warning of the need for curtailment of public spending and that borrowing had got out of hand. That is a simple statement of fact backed by most independent economists — that we must stop the rot and change our general direction. It is unfortunate that shortly after we had begun to get this message across, getting the public to accept that a certain restraint was necessary for a short time — and it must be remembered that these problems developed over several years, some influenced from outside the country and for which neither the present nor previous Government are responsible — we were no longer in office. But over the period to which I am referring certain matters were within the hands of the then Fianna Fáil Government and will be again during their present term of office if they will but grapple with them. It is important that this be known. It is important also that the manner in which they conduct Government business be changed. Most people recognise the need for action, for basic economic decisions to be taken by the Government. They look to this Government for leadership and expect them to take the basic economic decisions which hopefully will pull us back from the dangerous slippery slopes.
To deal with the more specific points of the budget, I shall refer firstly to the social welfare payments included in the January budget and which this Government are implementing, something I very much welcome. I suppose one could contend that the various social welfare payments were adequate because I do not believe in dwelling on whether this or the previous Government were over-generous in giving allowances to the various dependent groups. A lot of such beneficiaries do not have the backing of lobbying groups. They do not have people who can go on marches or who have much political muscle. Many of them must depend on whatever it is we provide for them in this house. Therefore they must depend entirely on what we decide is adequate from time to time in relation to inflation and hope that from time to time we shall be able to give them a double payment. It is to be welcomed that the Minister has implemented what was proposed in the January budget. I hope also that he will give a specific commitment in regard to what he said in relation to the setting up of a committee or a working party to examine the plight of people living alone. In this day and age we are subjected to various pressure groups, some of the more popular ones, perhaps to the exclusion of the aged and others dependent on various allowances, or other people who form a small minority, who may not have any backing. We must examine their cause and provide them with as much as possible.
In regard to the general taxation proposals of the Minister I hope that the Commission on Taxation in reporting will take several factors into account in arriving at a more equitable tax base. It is generally recognised at present that the tax base is too narrow, that there are too few people in the net. Some people are paying more than they should be, there are certainly many people paying less than they should be, with probably some paying very little at all. Members on all sides of the house will welcome the commission's findings and will support the Minister in his bid to extend the tax base. In this respect obviously he must examine the various aspects of our taxation system. He must examine tax avoidance and evasion. He must also examine what I believe is perhaps the kernel of the problem at present, the position of the PAYE worker in relation to his take-home pay. It must be remembered that whatever may be one's gross pay it is the take-home pay that matters, how far one can make that go and how far one can avail of benefits or tax incentives in other areas.
I might mention pension schemes in this connection and the need to increase incentives for people subscribing to pension schemes. They should be afforded every tax incentive possible. For example, if we are considering the provision of more jobs, if we are thinking in terms of an earlier retirement age, we must then ensure that people would have their nest egg or golden handshake on which to fall back. There is no point in asking people to retire in their early sixties, giving them a certain amount and then taxing it to the hilt. That is not good enough for somebody who has worked 35 or 40 years, telling him that he is now being retired but yet will be subjected to very severe taxation.
I would ask the Minister to pay particular attention also to taxation on savings. As far as I am aware the annual interest limit at present of £70 for a single person and £140 for a married couple has obtained for a long time. This limit should be increased to encourage savings and make that exercise worthwhile in these days of rampant inflation. The various tax-free saving schemes should be examined and their scope and benefits widened where possible.
Those are a couple of proposals I hope the Minister will consider in his overall examination of the taxation system. In regard to the jobs proposals of the budget I must say I found them singularly lacking in any commitment to providing employment particularly for our young people. In 1982 we have reached the stage where many of the old and traditional employments are very limited as regards vacancies. Anybody here who has had representations from constituents or friends seeking assistance in getting a son or daughter into employment will realise that competition is now extremely keen for any position, however menial and no matter how many vacancies there are. There are literally thousands applying for tens or at most hundreds of jobs. Whoever recommends, there are only so many positions in the case of these more traditional jobs.
There is also a disturbing aspect of employment regarding people coming through the universities. They come out with a degree but can find no job. In some professions or trades there may be emigration possibilities, but unfortunately other countries face somewhat similar problems to ours and their doors are closed. Avenues which were available some time ago are also closed and we must now look towards other trades and professions, and perhaps to jobs less popular up to this, in trying to provide so many people with work.
We must also look at our educational system. I hope the necessary money will be available to provide incentives, organisation, guidance and instruction. I hope the necessary money will be provided to change some of the courses we have. A person of 15 or 16 who may have struggled through some pass subjects in the intermediate may be at a time when he or she should change over to a different course, a more useful course, perhaps a work experience course or training programme even on a part-time basis so that when that pupil comes out at 18 he or she will not have some sort of pass leaving certificate which will not be worth the paper it is written on or get them anywhere. However, in order that they may have done a couple of years exploring the possibilities of industrial, technical or computer type of job, it may be advisable to switch them on to getting some work at 15 or 16 rather than when they leave school at 17 or 18 as at present. I urge the Minister for Education to have a radical re-think in regard to providing the many people leaving school now with jobs. We must obviously provide jobs for such people and I trust the necessary money will be found.
As regards the proposals for Dublin's inner-city, while the apparent millions are to be welcomed, perhaps helped along by Deputy Gregory — so far a fairly consistent supporter of the present Government — I would not begrudge the inner city any of this money for housing or house reconstruction or for derelict sites. What I would question as regards spending public money is the equity of spending over the country in general. It should not just be millions for Deputy Gregory in Dublin or for Deputy Blaney in Donegal. In my constituency of Dún Laoghaire many serious problems have arisen. There are difficulties regarding the provision of adequate housing for the many people still on the housing list, but we also have the added difficulty of a local authority keeping going on the block grant from central funds. Certainly, the abolition of rates, which were done away with by Fianna Fáil with a stroke of a pen in 1977, was welcome; but I do not know if it was fully thought out at that time what the implications would be for local authorities, where they would get the extra millions for this and that when it is not in their power to provide this money themselves.
This is a problem to which the Government and all Members of different parties in the House will have to give special attention. We now have a situation in Dún Laoghaire where, according to present estimates, Blackrock and Dún Laoghaire baths may not open. This is not very satisfactory because the alternative to keeping them open may be to lay off so many men who have worked for years in Dún Laoghaire Corporation. That is certainly not acceptable to me. I hope the relevant Minister and the Minister for Finance will see their way towards allocating sufficient funds to enable not just survival services but absolutely necessary services to carry on. In the period since 1977 we have cut back on services saying: "This year we will only clean the town so many times a week and in the following year we will cut out another bin collection. We will cut out the opening of a swimming pool on certain days or cut out housing maintenance." To me this is entirely unacceptable and would be unacceptable to my constituents and to the Members of this House generally. I hope that Dún Laoghaire will get the same treatment as anywhere else, the same treatment that inner Dublin and Donegal are getting.
We have problems of housing maintenance and reconstruction. If it costs more to build new houses, houses becoming free that just need basic repairs should have such repairs carried out and the necessary money should be provided. The more we allow houses to fall into disrepair the more problems we will have until eventually rebuilding is cheaper. I appeal to the Minister, the Taoiseach and the Government for a sense of fair play in the provision of public money for the various local authorities. The Government and, I suppose, the Members of the House must look much more seriously at the means of financing the various services. There is no use in continuing with the attitude: "There is your money; how you spend it is up to you but there is no more where that came from. It is a matter of cutting back on services". I understand that in Dún Laoghaire this year we are getting something like the extra money necessary for a set of traffic lights. If it is a question of a set of traffic lights or keeping Blackrock baths open, I want to keep the baths open because I think it would pay more dividends in enjoyment and in providing entertainment than perhaps traffic lights at some junction which, while they may be desirable, do not compare with the baths as an amenity.
Although I do not represent an agricultural constituency, I recognise that there are problems in this area and that those problems affect all of us. It is important that there is not a division between urban and agricultural people. There should be unity on this so that we get the best deal for the country. I would like to refer to one aspect, which is very often ignored but it is an important aspect of agriculture. I refer to the horse racing industry, breeding and the spin-offs from this industry. There are thousands of people employed throughout the industry. Racing and horse breeding are going through a difficult time. One of the reasons is the 1½ per cent levy imposed by Fianna Fáil a few years ago. If things pick up I hope the Minister takes another look at that to see if it can be removed and that he ploughs money into the industry. If this is not done jobs in the industry will be lost.
Money was provided in the budget for the Garda. I hope this is only the first step by the Government in providing equipment for the Garda to make sure that people are able to live at peace in their homes. I hope that this is only the first instalment of the Government's commitment to tackle this problem.
There are some aspects in relation to Deputy Gregory's money for the inner city which should be considered. One of those is the Connacht Regional Airport, our old friend Knock Airport. While we would all welcome an airport in any part of the country, I believe that the Connacht Regional Airport is a misnomer because, according to most statements that have been made, if there is a need for an airport in the west it is not at Knock. I believe this money could be better utilised in encouraging factories to come to the west, in the provision of roads and a proper telephone service as well as other communications. I hope the Minister for Posts and Telegraphs will continue to honour the commitment of the two previous Ministers in relation to the provision of telephones. It is working telephones we want, because without communication to factories and warehouses in various parts of the country business will be lost. I believe that providing money for an airport at Knock at the moment is a waste of money. It will be a second miracle if this ever pays its way.
There are a few things to be taken into account in relation to how this budget differs from the previous one and how Fianna Fáil are making up the difference. The one per cent insurance levy is one way Fianna Fáil are making up the difference. Who will pay for this? Will it be the various insurance companies or the ever faithful public in relation to premiums? I believe this will fall back on the public because I do not believe the insurance companies will accept that they will have to pay their fair share. I hope the Government will look at insurance, particularly in relation to the insurance of cars for young people. Young people have heavy levies imposed on them when they try to obtain third party or comprehensive insurance on their motor bikes and cars. I hope the Government will continue the commitment of the previous Government in relation to the provision of car insurance to the general public at a reasonable level.
I welcome the money provided for the fire services and sanitary services. I hope money will be provided for the new fire station due to be built in Dún Laoghaire. Deputy Murphy said there seems to be plenty of money about now for a fire station at Bray. I hope there will be fair play from the Government and that Dún Laoghaire will get the new fire station we have been awaiting for a long time.
I hope the Government will have learned from their previous errors and mismanagement. The people are looking for a commitment from them to solve our various problems. The Government should take the necessary decisions, some of which may be unpopular and may cost them some unpopularity. Fianna Fáil must govern. The country has lacked Government for a number of years with the exception of the seven months from June 1981 to January this year. Fianna Fáil have caused a lot of our problems. The people want leadership and they want the Government to be seen to be acting in the best interests of everybody. They want to make sure that our financial affairs are brought into line and that there are jobs for our young people. I hope in the next few weeks, even allowing for the Dublin by-election, that the Government will take the necessary decisions and assure the people that they are a Government prepared to tackle our various problems.
I have my doubts about any such commitment. It looks as if the Government will continue on their gamblers' throw image of governing from day to day with one eye on the opinion polls and the other on the cameras. I hope that I am wrong in that but one cannot be very confident as to what action the Government might take when one considers that the Financial Statement, as well as not taking full cognisance of our economic problems, is bringing forward money from next year to pay this year's tax. What sort of situation will we be in as a consequence of that in facing into next year? However, there is still time for the Government to make some changes in the budget and thereby to allow some of the objectives of the previous Government, objectives that were recognised and supported generally by the majority of the people, to be adhered to.
Níl móran le rá agam i dtaobh an cáinaisnéis. To say the least, it is unusual for two budgets to be introduced within the space of two months. While we all know the reasons for this situation, it is no harm to say that the bad advice from all those advisers who were appointed by the previous Government brought about the budget of January 27 and, consequently, the downfall of the then dithering Government after only a short term in office. In the short time available to the new Government to introduce a budget many changes that they would have liked to have made could not be made. However, any change promised by Fianna Fáil was made in the budget.
In their reappraisal of the economic situation Fianna Fáil even at that time had initiated a plan for the development of the economy in the next four to five years. That plan will incorporate the policies necessary to deal with such questions as unemployment, prices, balance of payments and Government borrowing. The central objective of the plan will be to establish the conditions necessary for sustained growth in employment. The greatest problem facing us today is the problem of unemployment. If we were to use the budget simply for the purpose of achieving financial targets without having regard to other consequences there would be a risk of serious damage to the economy. In addition, given the structure of our tax system and the narrowness of the tax base, such measures can cause sharp increases in the consumer price index. That type of situation in the past has created pressure for higher wage increases leading in turn to higher inflation rates. The essence of successful budgetary policy is to find the balance between the need to keep borrowings as low as possible and the obligation to ensure that all opportunities for economic and social progress are exploited fully. The Government are committed firmly to bringing the current deficit under control and gradually to eliminating it. In the months before the introduction of the budget there was much emphasis on deficits and on borrowing but the attitude of the Government in their approach to these questions was to be flexible and, therefore, more in tune with underlying developments both at home and abroad.
Borrowing for capital investment is essential if we are to develop the economy fully and to meet the challenge of unemployment. To quote something that was said here already, there is not much good in having well balanced ledgers in the Department of Finance while there are empty stomachs throughout the country. The experienced gentleman who made that statement put the matter in a nutshell. We are in the unique position in the European context of having a young and growing population. That presents us with both a challenge and an opportunity but more than anything else it imposes an obligation on us to create more employment for the additional numbers entering the labour market. We must have a proper sense of priorities in terms of capital investment. We must concentrate our resources on projects that will yield worthwhile returns. This does not mean, however, that essential social investment should not proceed but it means that the social returns from such investment must be clear and substantial so as to justify the borrowing entailed.
It is not a solution to our problems to be continually bemoaning the difficulties we face. I include in that reference the hackneyed phrase of gloom and doom. We must approach the situation with confidence and with well-founded optimism if we are to make the progress that is necessary. We must go forward in the confidence of having the capacity to fulfil our aspirations. I should like to draw a comparison with the times in which we live and a similar state of affairs that existed in the early thirties. That was before my time but I have read a lot about it. I refer to the decision that was taken then not to pay land annuities to our big brother across the water. That was in a situation known generally as the "Economic War". It was when our great former leader and statesman, Mr. de Valera, asked our people, both urban and rural, to face up to the situation and to accept sacrifices in the best interest of the country. To the credit of the people who went before us they answered his call despite harassment from some sources which, out of charity, I will not mention today. We are almost in that situation now. Our adversaries are located in different places than before but nevertheless we are in a western world that is suffering from economic depression.
The Government and Members of the House would do well to appeal to our people through honest leadership to repeat that dedication, that nationalist spirit and that pride in ourselves as a small nation struggling to survive. If the appeal is made in an understanding manner to our people they will rally and together we will pull through. However, if we keep on a course of divisiveness — ní neart go cur le céile, mar a deirimid. The fact is that a nation's living standards can only be maintained and improved and employment safeguarded if we all make a contribution to achieving this objective. The natural concern of parents is the welfare of their children and most are ready to make sacrifices in order to enhance their prospects. Many parents are understandably concerned about the job prospects for their children. I am sure that I, as a parent of a growing family, am echoing their concern when I say that those already in employment should not do anything to undermine their legitimate hopes. Our principal aim should be to provide jobs for our young people who want to work in their own country. Those who watch children leaving school any afternoon must ask where will we get jobs for them all.
The improvement in the social welfare benefits and the increases in the social welfare contributions announced in the January budget were given full effect in the Social Welfare Bill, 1982. We all agree about the necessity to have a proper social welfare code. Allied to these we have our health services and our education. The Minister for Finance provided an additional £10 million to reduce the financial constraints on the health service. Those of us who are members of health boards are aware of the situation that was developing in regard to finance but now health services will benefit from a further £8 million additional buoyancy which has emerged in health contribution receipts. It will be possible also to divert a futher £10 million to hospital services within the revised total allocation. In effect, Exchequer grants to health agencies for health services will be £797 million in 1982. That is a huge figure for such services and it suggests that there must be a lot of unhealthy people around, but I wonder if we are getting full value for that sort of expenditure.
We have heard a lot in recent weeks about local authorities being short of finance and I accept that they are. Local authorities can use any money that is given to them. I contend that many years ago we should have borrowed money from abroad to develop local services. Roads are an essential part of our infrastructure and when dealing with them we must remember that there has been a huge increase in the number of vehicles here. We must also bear in mind that the axle weight of vehicles has increased in a short space of time and those heavy vehicles are using roads that were constructed at a time when people were using a horse and cart. The heavy vehicles are having a disastrous effect on our roads.
The previous speaker referred to the decision of the Fianna Fáil Government in 1977 to remove domestic rates and abolish car tax saying that those decisions were not adequately considered. As a member of a local authority I have heard it stated on many occasions that roads in Cork were not in a good condition as a result of the decision to remove car tax. I contend that that was a radical policy then. In August 1977 it cost £84 to re-tax my car. Instead of that I registered it for £5 because then I had £79 to spend, £5 here and £10 there. This was the whole idea of the exercise, that rather than a once-off payment into a local authority office, transmitted to the Exchequer, the money would be spent in the economy and would be gaining and adding value to the economy. It was a retrograde step by the Coalition Government last year to re-introduce car tax. As a member of a local authority I was looking forward to seeing a big flow of money coming into Cork County Council and other local authorities by virtue of the restoration of car tax. That did not happen. People might ask why we did not discontinue it in our budget but it was said during the election that the basic structure of the budget introduced by the Coalition on 27 January would not be changed because of time constraints; the same budget would be re-introduced by us with a change of emphasis on some aspects of it and those aspects of the budget were honoured.
On the question of local authorities, it is time that the statutory demands on local authorities were at least limited to the same increase allowable by direction of the Minister for the Environment in each new rating year. The local authorities are dealing with demands from committees and statutory bodies within their local authority area and their demands in the years since 1977 have been greater than the percentage increase allowed by the Department. We had varying increases of 10 per cent, 11 per cent, 12 per cent and this year's increase was 15 per cent. Is it not time for the Department of Agriculture to consider the work of the committees within the local authority area? Is it not time for the Department of Justice to take over the maintenance of courthouses? Is it not time for the Department of Education to make up the difference of the allowable increase in rates and the statutory demands because, as happened in County Cork in 1981, the element for county road maintenance upkeep, overhaul and improvement was about £8 in the £ of the total rate struck? Local authorities will have to get together and look at the financing structure within each local authority. I am very concerned about the statutory demands exceeding the allowable percentage increase each year.
There has been some criticism about the removal of domestic rates by the Fianna Fáil Government in 1977. If people wish to have rates on domestic properties re-introduced without any reference to ability or inability to pay, let them say so. They are inclined to forget that it was a Coalition Government which meddled with the rates initially, a 25 per cent health contribution taken off one year, 50 per cent taken off the following year and so on. Perhaps they encouraged Fianna Fáil to discontinue them.
In October 1980 the Government announced a detailed programme for relocating Government offices. Considerable progress had been made with site acquisition, design work and planning before we left office. One of the areas concerned was in Cork city. I am glad to see that the Minister for the Public Service, a Corkman, is now reviewing that programme with a view to getting it under way as soon as possible, in consultation with staff. I am also glad to see that sufficient funds are already available in the Estimates for the Office of Public Works to cover expenditure likely to arise this year.
There are two Garda stations in the constituency which I represent, one at St. Luke's and the other at Shandon Street. I do not know how long they have been in existence but from St. Luke's in eastern, north-eastern and northern directions a huge town has grown with hundreds upon hundreds of houses. After many years of talking and buck-passing from one area to the other, that vast area is still without a Garda station. The same applies to the north-western side of Cork city where the little station in Shandon Street served its purpose well from when it was first occupied. Northwest of it, and west, have grown into another large residential and well-populated area, including Farranree, Gurranabraher, Churchfield, and there is a recent addition of 600 houses in a place called Knocknaheeny. Can the House imagine those two areas in Cork city in 1982 being without the services of a Garda station? They are without the necessary protection they would have from the Garda if the Garda had a physical presence there, and what it would mean to the peace of mind of many citizens in those areas, some of them coming into middle age, contending with the exuberance of some of our youth. When I speak of the Office of Public Works and so forth I would hope that positive steps would be taken this year to ensure that a Garda station will be built and staffed at Gurranabraher and Mayfield.
Still on the Cork area and not wishing to be parochial, I hope the House will allow me to refer to another Cork matter, the agreement to purchase the Whitegate oil refinery for operation by the Irish National Petroleum Company. I thank the Government and the Minister concerned for providing £10 million for its purchase, overhaul and the running and staffing costs during the period until the refinery begins to trade again. By then the Government expect that the Irish National Petroleum Company will have been established by statute. That was a tremendous boost to us in Cork because the taking of the refinery into national control will ensure the maintenance of the jobs of which I spoke earlier.
The previous Government decided to discontinue the IDA re-equipment grants. Goodness knows why. They continued the scheme in regard to the food processing sector only. In normal circumstances it would be expected that firms would upgrade their technology out of existing profits, especially given the generous tax allowances which apply in the case of replacements. However, in the economic environment in which firms are operating, this Government decided quite rightly to restore re-equipment grants with effect from 1 April last. The existing provision for the IDA includes a substantial element for re-equipment commitments already undertaken and it is not expected that the restoration will require an increase to the IDA general allocation for 1982.
Unlike the previous speaker, I have a small element of agriculture in my constituency and being of that agricultural stock I have always contended that despite the tremendous efforts that have been made — speaking in these terms we must always pay tribute to the late Seán Lemass, the architect of our industrial development — and the progress in industrial development, agriculture is still our single most important industry. It can be said truly that any setback agriculture has suffered in recent years has had adverse repercussions throughout the entire economy. In the interest of national economic development this Government attach the greatest importance to ensuring that the stimulus to the farming community to develop and expand will not be lost. Accordingly, if for nothing else but to show faith in that resolve, grants under the farm schemes are being restored to their pre-September 1981 level at a cost of £4 million in 1982.
I am sure all of us will agree that when the agricultural community and industry are progressing the effect of it will be seen throughout the entire economy. I have no doubt that the Minister for Agriculture, the Department and the Government will see to it that agriculture will be encouraged and given every assistance to develop. It is a natural resource and one can say it is only six inches under the ground.
Ní mór dom a rá, de bharr go bhfuil cion agam don Ghaeilge, agus ainneoin nach bhfuil im Dháil ceantar aon cheantar Gaeltachta ach áit beag amháin i nGleann Mhaor, go molaim, an tAire de bharr gur thug sé do Údarás na Gaeltachta san cáinfhaisnéis ar a bhfuilimid ag caint milliún punt sa bhreis ná mar a bhí tugtha don Údarás nó mar a bhí geallta dóibh sa cháinfhaisnéis i Mí Eanáir. Caithfimid a rá aon chabhair a bfhéadaimid a thabhairt do mhuintir na Gaeltachta, ba chóir dúinn é a thabhairt dóibh. Molaim an méid atá déanta agus atá dhá dhéanamh, agus tá súil agam go mbeidh leanúint na hoibre ar son muintir na Gaeltachta, mar is uathu siúd a mbeidh an Ghaeilge agus fás na Gaeilge beo. Caithfimid a bheith an-bhuíoch do mhuintir na Gaeltachta de bharr gur choimeád siad ar dteanga dhúchais le seacht gcéad bliain anuas. Molaim, faoi mar a dúirt mé, cabhair an Aire do Údarás na Gaeltachta agus do mhuintir na nGaeltachtaí. Tagaim thar n-ais anois ó caithfidh mé aistriú go Béarla.
I welcome the Minister's commitment to full deepwater berthing facilities at Ringaskiddy in County Cork. This development has been going on for some years and was in danger of being shelved, according to some statements being made by those in Government in the latter part of last year and in the early part of this year. It is encouraging to find the Minister providing £2, million to begin this work. The proposed development down there was the brainchild of Cork County Council, who encouraged the IDA to acquire about 1,000 acres of land which provided what is known as the city and county harbour water scheme with the services for industry to take off. Money has been provided by Fianna Fáil Governments over the years for the ongoing development at Ringaskiddy and, more important, the provision of an adequate road out of Ringaskiddy to serve industrialists who provide employment there.
The construction industry can provide the greatest number of jobs for the least cost in the shortest possible time. To make inroads as quickly as possible on the high level of unemployment the Minister is providing £50 million for the building industry. Of this amount £21.7 million is included in expenditure already announced in respect of local authorities, including urban and rural schemes. We have heard a lot about one particular urban renewal scheme. There are urban renewal schemes in other places. There was a fine urban renewal scheme in Cork city known as the Shandon renewal scheme. This proposal, emanating from the Cork Corporation, is a credit to the elected members and the staff of the corporation. I am not going to make comparisons with other places, as seems to be the habit of many public representatives, but the proposals I refer to justify the moneys that were given to it.
I would like to refer to some of the press criticisms of the Minister for the Environment in regard to giving answers to the Cork delegation. I am not a member of the Cork Corporation, but I was sitting in as an observer at the meeting in question and I heard the Minister for the Environment invite the delegation to name a date within a month of the day he met that deputation when his Minister of State, Deputy Brady, would go to Cork. The deputation dithered and were unsure about giving a date. Finally, they gave one and I am glad to say that the Minister is going there next week to see for himself what is required. I know the corporation will make their case and I am sure they will get the extra money to sort out their difficulties.
I notice that the net effect of all the proposed adjustments is to increase the 1982 Exchequer borrowing requirement for capital purposes by almost £58 million to £1,004 million.
I would like to refer briefly to an element of the income tax proposal in the budget. Fianna Fáil decided against changing the present structure of income tax in order to apply tax credits because a switch to tax credits for the next income tax year at this stage would give rise to enormous administrative confusion with little result to show for it. I am tempted to refer to the infamous £9.60 tax credit for stay-at-home wives. Because of the way this was spelled out many stay-at-home wives could not but believe that they were going to benefit to the tune of £9.60 per week for staying at home, minding their children and looking after the house. Of course they were not told that that £9.60 was to be taken out of the husband's pay packet.
People might say that the £9.60 has been spoken about often enough. However, I take this opportunity to refer to it again because it was the greatest con job that was ever done. It was a hidden tax credit transfer. All stay-at-home wives thought they would get £9.60. Those who went around the various constituencies telling people about it did not have the honesty to say to those who did not pay income tax that they would not get it. I know many people with large families and small incomes who would not be paying income tax. They would need £9.60 but the perpetrators of that confidence trick did not allow for them.
Another aspect of the budget was the taxation of short-term social welfare benefits. I am glad our Government did not go ahead with that proposal. Such a tax would impose an unfair burden on those who are so unfortunate as to be made redundant. I contend that many people who are genuinely out of work and unable to get it would have been taxed by the previous Government's proposal. There are people who are abusing the social welfare code. The existing provisions in some cases encourage absenteeism and reduce the incentive to work. Despite that, it does not warrant the general imposition of a tax on those in reduced circumstances who have no choice in the matter. I am glad to note that the question of reforming the current arrangements will be pursued in other ways. This is desirable because in some situations there was very little difference between the benefits accruing to people and their take home pay. This is very annoying to those who are asked to pay an extra 1.75 per cent to help the unemployed and an extra 1 per cent for youth employment. Many workers are unwilling to contribute any further moneys because of abuses of the system. I am glad that the matter is being examined.
I compliment the Minister for the two VAT changes he made in the budget. As regards VAT on books, especially schoolbooks, the proposed rate of 18 per cent would have been very severe. The Minister reduced this area to zero rating from 1 May. I should also have mentioned this welcomed retention of food subsidies at a cost of £34.3 million. At this time of economic struggling, food subsidies should be maintained. However, they should not be retained ad infinitum.
The Fianna Fáil budget will have a decidely favourable impact on employment. The removal of VAT from clothing and footwear, the imposition of VAT at the point of import and the retention of food subsidies will sustain purchasing power and protect our home industries. Increased capital allocations, particularly for the building industry and local authorities, will give a positive stimulus to employment. This will be helped by the employment incentive scheme. Employment must be central in the medium-term plan which is being prepared.
The increase in prices as a result of this budget will be less than they would have been under the January budget. The CPI effect is estimated at 2¾ per cent as compared with the 4¾ per cent which would have resulted under the January proposals. This will help to lessen inflation and encourage moderation in pay expectation. The balance of payments position will be improved through better export performance and all round competitiveness. The budget represents a fair balance between controlling the public finances and giving a stimulus to economic activity and employment.
The extra taxation is distributed as equitably as possible, and in this matter we are all awaiting the proposals of the Commission on Taxation. In the meantime the greater burden is being imposed on those best able to pay it. The general social welfare changes provide considerable improvement for those who most need this help.
The budget is a sensible response to the present difficult situation. It will, I hope, create more confidence in the country both at home and abroad and will provide a strong impetus for greater progress.
Sin a méid atá le rá agam ag an am seo ar an gcáinfhaisnéis.
It is strange to hear Members of the Government party claiming credit for a budget which varies so little in detail from what the outgoing Government introduced in late January. The outgoing Government introduced their budget with an air of seriousness and responsibility and the feeling that the contents of that budget were necessary to get this country out of a difficult situation which had been allowed to escalate to alarming proportions over the past four of five years. That anybody should begin to take credit at this early stage of office for a budget which varies only in two or three respects from what the outgoing Government intended is indeed strange. I suggest that the Government wait. Hopes are one thing, aspirations are another. But what is blatantly lacking in the Government is an objective and it is not only an objective of fiscal figures or of projects. There is a lack of motivation behind this budget. No matter what talking is done about it or what hopes are read into it, no matter what degree of confidence the Government Ministers try to instill into people regarding it, the basic problems are still there as they were before the budget of 27 January. The only difference is that there is no motivation in this budget. No procedure is set out in it whereby the basic problems can be overcome. The financial constraints are still there, both on the Exchequer and on local authorities. Financial constraint lies at the core of this nation's problems.
Everywhere one goes today one comes up against the feeling that this country is going nowhere in a positive direction. On the contrary, it is going more and more quickly down the drain. In shops one meets shoppers who have little enough money to spend, and if money is not spent across the counter little goes into production of purchasable items and that means reduction in employment. In the business community one finds that the future is faced with fear and trepidation rather than with the confidence to which we have heard some Government spokesmen refer. This budget in one of its elements — namely, the imposition of VAT at point of entry — contains not only a possibility but a probability of risks of unemployment and closures in the very near future. We are now only four months away from the introduction of VAT at point of entry. Business firms fear 1 September because they know that then a burden will be placed on them in regard to obtaining a cash flow situation which will enable them to get over the initial purchase of raw material problems and go into production straightaway. This could well result in their having to lay off people. There is no justification for the imposition of VAT at point of entry. It was introduced in this Government's budget for no reason other than to find a sum of money very quickly. That sum of money can certainly be found in many ways, but this is the acquisition of capital in the short-term at the expense of long-term economic growth.
The financial constraints are still as heavy on the Exchequer. One could be facetious enough to say that they are even heavier than they were when the budget was introduced one month ago, because every week since then additional and by no means petty amounts have been promised for various schemes, institutions and projects around the country. It is nothing to pick up a newspaper and read of a sum in the region of £30 million to £40 million being pledged. This is really only paper money. It must be obtained somewhere; yet we find no indication as to where it is to come from other than a mere reference from the Minister for Finance that it must be raised through cutbacks in expenditure or by additional taxation. Indeed, this afternoon we find the Taoiseach facing up with perhaps the first sense of reality to the impending problems. He referred to the possible need for further taxation measures. This is inevitable. We cannot go on creating more and more production of purchasable items, and to additional projects and expenditure without referring to where that money is to come from. This problem is extended into the local authority area where we find every county council, corporation and urban council faced with an ongoing, escalating difficult situation whereby they are unable to meet their monthly commitments. Not alone are they unable to face up to projects for the next 12 months or even indicate where they will be in six months' time on their balance sheets, but they are faced now with the problem of paying their employees within one or two months ahead.
It is all so easy to say that there will be a reduction in taxation. It is also easy to say that rates and car tax will be abolished. As I said earlier, it is easy to say that nothing will happen in the short-term but it is the long-term position that has to be related to, not only by the Government but by the local authorities also. A deplorable position has arisen. Local Authorities have been coming to the Minister for Finance weekly now. Those who have not humiliated themselves knocking on his door seeking further finance, having tried in a responsible fashion to face up to their responsibilities at local level, are writing letters to the Department of Finance setting out their difficult situation and asking for a subvention of some sort to tide them over this precarious time. At local authority level this means that employees must be laid off and that services will deteriorate even further. Nobody can say that the services at local authority level are at the same level as they were ten years ago; yet the amount of finance that has had to be pumped into provisional local services has gone out of all proportion to any increase in the level and quality of those services. This means that people must provide more and more moneys to pay for fewer and fewer services. Whatever Government are in office this dilemma must be faced.
Debate adjourned.