In spite of the concern of Deputy Andrews for the well-being of the Fine Gael Party, I can assure him that we know where we came from, where we are and where we are going and he need have no worries about us. Despite his remarks about political commentators he shows no mean skill himself in that particular area and if he ever leaves this House, which I trust will be a long way off, I am sure he will find ready employment among the ranks of the scribes he so readily castigates.
In my consideration of this Finance Bill I was reminded of a man named Andre Queille who was Prime Minister in the French Third Republic. By the standards of his time he was a very successful Prime Minister in that he was very good at getting power and holding on to it. His basic political philosophy was that statemanship consisted in the art of postponing problems until they were no longer relevant or until he was out of office and somebody else had to clear up the mess. It was a combination of people like Andre Queille and their arguments that led to the collapse of the Third Republic with the resulting failure of the people to believe that the Republic and its institutions were worth fighting for. That particular period of French history was characterised by self-seeking politicians, by its domination by sectional groups and their inability to see beyond the next parliamentary vote and most of all, by the complete absence of the will to take any long-term political decision.
Looking at this Finance Bill and looking possibly at those events which were sandwiched between the publication of the Bill and the budget one can only say that the spirit and the morals and the practices of the French Third Republic have come back to haunt our political system. The budget of last March was in some respects a phony budget. It bore little relation to either economic reality or basic accounting. It certainly fell far short of Fianna Fáil's election target but it did include commitments of a highly sectional nature entered into in this pursuit for power. I am surprised that Deputy Andrews could take such pride in the way in which the Gregory deal was arrived at, a deal which by-passed the Cabinet and this House. It was a private deal entered into between two private individuals which nevertheless committed the State to enormous sums of money. I am surprised that he as a parliamentarian should take so much pride in that deal. I do not say that anybody here does not want to see Dublin restored to some form of greatness or that we do not all take pride in our capital city, but I am astonished that a Member of Parliament who believes in the supremacy of Parliament could in any way take pride in that deal.
The budget of last March, whether on purpose or not and in part perhaps to assuage the feelings of the Workers' Party, was calculated to weaken the business community and damage the creation of new jobs especially through the bringing forward of payment of corporation tax and VAT payments from industry by £176 million—and of this at a time when cash flow problems were never greater and the margin of profits never so tight. Typically, that particular ploy was in the interests of short-term expediency. In an artificial way it would alter the budget deficit at the end of this year, although in fact not addressing itself to the underlying problems and in turn storing up problems for next year. There was at least in that budget an indication that the Government were in some way facing up to some aspects of reality. It was not doing this willingly or convincingly but at least it was recognising the inevitable.
There is no doubt that by the end of the election campaign in February the people had begun to recognise the sucicidal policies of excessive foreign borrowing the proliferation of non-productive State spending. The people were ready to make sacrifices especially if these sacrifices were imposed in a fair and equitable way. People were ready for leadership, ready to follow where a lead was given courageously in a direct and straight way.
This change in public mood was due to the Coalition Government's courageous facing up to facts and having the courage to follow on from their recognition of the facts and to take hard decisions, but by the end of the election that was irrelevant. It may have been galling for us politically to find that our sacrifices and ultimately our loss of power had prepared the people for the imposition of further sacrifices in the interest of healthy finances and of future progress.
Politically we had paid the sacrifice but nationally we had made it easier for Fianna Fáil to act decisively and for that as Irish people and as politicians we can only be pleased. Sadly and tragically the political leadership was not forthcoming. Instead we had the most shameless abdication of responsibility in our history. As soon as the interest groups began to howl, and howl as they probably always will, the Government began to capitulate on a wide variety of areas so that what we have got is the cynical negation of leadership and further loss of political self respect.
The result of this attitude can be found in a number of places. It can be found, for example, in the concession that gives an additional £312 to each PRSI contributor in the private sector and which will cost an extra £45 million this year. The granting of that concession may well have merits but the way in which the decision was taken and the timing of it smacks of expedient ad hocery. More important, there is no indication anywhere in this Bill as to where, how and from whom this extra money is to be raised if the Government at the same time expect to maintain their stated budget deficit. That behaviour is not good enough for a sovereign Government with a tradition, at least until recently, of fiscal probity. I am surprised that more voices have not been raised from the opposite benches at this behaviour. In the past few days we have had the beginning of the expression of concern on this question but it is surprising that more voices have not been raised in the same vein. The Government must come clean on this. If the targeted budget deficit is, in the words of Watergate, inoperative the Government must face up to this or else we are faced with extra taxation or with a supplementary budget. The public have a right to know what the situation is.
At this stage I do not intend to detail the promises made in Dublin West, running as they did into millions of pounds but without provision for anyone of them being more in this Bill. I do not know whether these promises will be kept but again and not for party political reasons but for reasons of national self respect and of the proper and prudent care of our finances, we must be told whether these promises are to be kept and, if so, how much they will cost and how the necessary money is to be raised. These were commitments that were solemnly entered into but there is no provision for them in the Bill. Are they inoperative? Again, we have the simple question of Parliament and of the public having a right to know.
But the question of whether these promises are to be kept is part of a much bigger problem. I refer to the tragedy of the deliberate and cynical dissipation of the new mood of civic responsibility, the new willingness to endure sacrifices in the national interest which existed at all levels and in all parts of the country at the end of the February election. That election was one of the great educational experiences of the last decade because in that election the people were given an insight into the State's finances. Hard choices were put before the people and by and large they responded.
At that time we experienced a mood of a kind that I do not remember having experienced before, though there may have been such a mood in the twenties or the thirties when people had far lower expectations of the role of the State and perhaps a far higher level of commitment to making the State and its institutions work. That mood was not easily created but when the people realised that the Government were serious and were prepared to take hard decisions spread evenly across the entire population, the people responded with generosity and with willingness. In the eight short weeks after the election and with the beginning of the deals entered into privately committing millions of pounds for certain projects, that mood has been destroyed shamelessly in the interest of short-term political survival. A great deal is necessary if we are to win back the confidence of the people and to bring about that frame of mind again.
The people must be prepared to trust politicians again but to bring about this situation they must see politicians acting in the interest of the people. A great deal would be needed in order to win back that trust and confidence. Indeed, it may not be possible to do so without the purging effect of a general election to clear the air. Anybody who has tramped around West Dublin day after day, who has been through three or four elections in the last ten or 12 months will not want an election soon. He will want to put an election off for a year or two years. Even those of us who consider that there is a need for an election may echo St. Augustine who prayed, "Dear Lord make me pure but not yet". I think Members on all sides share that sense of weariness, that sense of shame at going back to face the people once again. Nevertheless, if we do not have an election soon, though I believe we will have one, we may find ourselves in the grip of national paralysis, leaderless, buffeted in this direction and that, postponing problems and all the time creating those conditions in which the extremism of the right or the extremism of the left will flourish.
We should not fool ourselves into thinking that there are not in our society elements, perhaps on the ground, perhaps some recently surfaced, whose interest is in some form of long-term revolution and who will thrive on the condition of leadership, on general disruption, on the lack of credibility in politicians and on the general disaffection of people from the body politic. This is the problem which faces all of us as politicians who are committed to the supremacy of Parliament. It is a problem which if not recognised now may well put in jeopardy the whole future of this House and of Irish democracy. Tragically the position we face now is so unnecessary. The wounds that are now so evident so far as the present administration are concerned are self-inflicted and this has been done for no real purpose.
I wish to turn now to some specific aspects of the Bill. There is nothing in the Bill to indicate that the Government will meet the projected budget deficit of £679 million for 1982. The Minister argued that perhaps because of the budget being delayed the revenue for the first part of the year is down but that we could expect, with the bringing forward of other revenues, to reach the targeted deficit by the end of the year. There is very little that I find convincing in that argument. Already for the first three months of the year the deficit is £395 million or 58 per cent of the projected total for the year. Even if we allow for the fact that the first three months of the year are the most difficult, and taking into account all the allowances, all the factors and all the excuses put forward by the Minister this morning, it looks once again as if we are facing a £1 billion deficit by the end of the year and that is exactly the same figure as that faced by the incoming Coalition this time last year and which was only averted by the drastic surgery of the July budget. This time we are told there will be no supplementary budget but if we take into account the £45 million for PRSI and the consequences of the Gregory deal, we can see that we are heading towards this totally unacceptable deficit of close on £1 billion. That figure was unacceptable last year. It was one that every party committed themselves to reducing, but now, once again, we find ourselves facing the consequences for our entire financial, economic and political system which can be little short of catastrophic. There is nothing in the Bill or in the Minister's speech to indicate that he is in any way concerned about this, or that he believes that he is in any way off course. The Minister is living in a world of unreality if he believes that by the end of the year we will have reached our targeted deficit without taking drastic and painful steps. There is no indication that he is prepared to do so.
The bringing forward of VAT and tax payments is a once-off action which will create cash flow problems at this most precarious of times. I do not like using terms such as "cash flow" but this will mean that firms will not have the money, that they will go broke. People will be thrown out of jobs and the businesses once regarded as secure will find themselves facing insurmountable problems. As the Chair is aware the problem which has closed down that most promising of industries in Kilkenny is just one of the many problems which will face other businesses and which will be exacerbated by this VAT imposition. It is largely a cosmetic exercise designed to make the books look better at the end of the year.
As Deputies Bruton and Desmond stated earlier, the budget fails to face up to the question of short-term welfare benefit, and that is to be regretted. There is something wrong with a society in which people can earn more by being absent from work or, on purpose, working short-time than a person can earn working full-time. There is something wrong with the present situation which can so easily be fiddled and results in so many anomalies. The situation is a source of anger, resentment and scandal. It saps the morale of those who work hard, those who pay under the PAYE system and pay their PRSI on the nail but yet find that their take-home pay is less, substantially less in many cases, than that of a neighbour who for one reason or another has manipulated and worked the system and finds himself on PRSI but as an active participant in the black economy. Obviously, there must be protection for those who lose their jobs. The principle of PRSI is a good one. It is one where politicians have had the courage to say that this type of social insurance is worth defending. It has got out of control, is seen as another form of taxation and the abuses are so widespread as to be visible, especially to those who are in the workforce. There must be proper protection and a proper system. We are all aware from work in our constituencies that the present system is riddled with abuses and creates bitterness, suspicion and resentment between different categories of workers. It induces an anti-work ethos in the community and breeds cynicism. It produces all the hallmarks of a servile state.
No one would say that the taxing of short-term benefits was the answer to this problem but at least it recognised that the problem exists. It recognised that this is a deep-seated social and economic malaise in our society and it signified, on the part of the last Government, a willingness to face up to the problem even if that meant short-term political unpopularity. The mood having been created there, the willingness has been dissipated in the weeks since the election.
I should now like to turn to the capital gains tax concession in the Bill. According to a Government statement the effect of this concession which raises the exemption threshold to £4,000 per year will favour the small investor. Surely the fact is that an individual stock market investor who realises a gain over and above indexation relief of £4,000 per year — that is what is involved — could hardly be regarded as a small investor. Supposing a capital gain of £4,000 represents a 5 per cent real return, then the associated investment is of the order of £80,000. Any person who can afford that type of investment annually can hardly be called a small investor but that is the person now favoured in this Bill. However, the genuine small investor, the person who typically saves through an institution by participating in a unit trust or taking out various forms of life insurance is excluded from this form of relief. In other words, there is a discrimination between the person who invests individually through a stockbroker, a person who is pretty well off, and the person who pools his money with others in a unit trust. In the latter course the person who pools his money with others in a unit trust or invests in an insurance company would be liable for the full 60 per cent short-term tax rate with no exemption thresholds.
Life assurance investment is also hit by the 1 per cent levy on premium income. In effect, the Bill does not contain any joy for the small saver whose chagrin must be greatly increased by the fact that now the fat-cat investor is so much better off as a result of very skilful and effective lobbying after the budget.
At a time when our heavy reliance on foreign borrowing is adding to our balance of payments problems we should try to encourage savings, especially the committed type of savings from the small investors, the type of savings which flow into institutions, instead of making concessions which will largely help speculators and personal borrowers. The Minister should have another look at this question which is causing great concern among small investors.
I should like to return to a point raised by Deputy Desmond. I find myself in substantial agreement with him on this matter although I hope to use somewhat more moderate language than he used. I am referring to the wisdom of restoring relief on personal loan interest. That is a regressive measure and will add to the high interest rates problem. The benefits from this will accrue only to those with sufficiently high incomes to qualify for term loans and the collateral to cover them. Borrowers on a higher marginal tax rate will gain most. This concession does not do anything to discourage the practice of trading-up the housing market which artificially inflates the price of the lower houses. Those who continually buy more expensive houses and borrow in the process are creating problems and, artificially, are raising the price which the first-time house-buyer, the buyer of a modern house, must face. That concession will create an additional demand for credit. It will push up the already high interest rates and exacerbate the difficulties faced by industry and mortgage holders in trying to meet their borrowing commitments. The Minister should have another look at this. I believe the change was made in response to another powerful lobby. Those with the less powerful voice may be the ones who will suffer.
I should like to return to the overall financial and political philosophy which underlines the budget and is incorporated in the Bill before us. It is a philosophy which is part of this Bill and which has underlain most of the actions of this Government from 1977, but especially after 1980. The psychology, tone and style of this new philosophy were set in the manifesto of 1977 and have been all-pervasive ever since then. It is a simple philosophy: buy power by raising expectations and pay for it by borrowing. Something will turn up, and if it does not we will pretend that things are different. We can say, like Alice in Wonderland, that things are what we say they are. It is a terrible, frightening philosophy based on the assumption that the people are eternally gullible and eternally willing to be bought. It is causing concern right across this House and to the decent, ordinary members of political parties right through every part of this country.
It is right and natural that it should cause such concern because that philosophy is alien to the history and principles of the three major parties in this House. For me, as for most Members here, to take one's seat in this historic Chamber is a proud and unforgettable action. When I sit here on the backbenches — there is plenty of time for sitting on the backbenches — I often think of the great men who stood here and spoke, argued and debated over the years, the men and women who fought and legislated for the betterment of our people. As I close my eyes, as one does occasionally during speeches here, I think of how they might have been in the early days, young, ambitious, impatient, excited by the prospect of freedom. I can almost see them now, W. T. Cosgrave, Kevin O'Higgins, Paddy McGilligan, Paddy Hogan. Later in the thirties one can see the ghosts of Eamon de Valera, Seán Lemass, James Ryan and Seán McEntee, the last fortunately not a ghost but still with us. One can see them arguing and fighting. One can look at the Labour benches and see there the almost forgotten but noble figure of Thomas Johnson.
When I think of these people and their contributions I wonder how they would have reacted to the philosophy which I have just outlined. Can you imagine Deputy W. T. Cosgrave or Deputy Eamon de Valera giving in to any sectional demand, not to mention every sectional demand? Can you imagine them running away from commitments solemnly entered into in a budget voted by this House? Can you imagine them a few weeks later with the stroke of a pen changing that budget? Can you imagine them plunging the country into foreign debt in the interests of short-term survival? I could go on, but we know exactly how Deputy W. T. Cosgrave, Deputy Seán Lemass or Deputy Eamon de Valera would have reacted. Whatever their differences, these men were leaders. They told the people the truth about the economy, the balance of payments, and most of all, something we have forgotten today, the responsibilities of an independent State. These men never heard of PR or "strokes" and if they had they would have despised them and those who governed by means of "strokes" or PR.
This country is crying out for a return to these values and standards, for politicians who will face up to the problems and tell the people the truth. The people in harder times never let Deputy W. T. Cosgrave down. They never let Deputy Éamon de Valera down, nor would the people today let down a leader who is prepared to lead, to tell the truth and to face up to hard realities. However, if we are to get that leadership, the philosophy which underlines this Finance Bill and the actions of the Government over the past number of years must be eradicated immediately and completely from our national life. It is sad that this present Government show no sign or indication that that is about to happen. There is no will to see that that is done and that we return to these old standards. That is why this Bill must be rejected and we must have an election, however painful and uncomfortable, to clear the air and return to the old standards.