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Dáil Éireann debate -
Wednesday, 9 Jun 1982

Vol. 335 No. 6

Finance Bill, 1982: Second Stage (Resumed).

Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:—
"Dáil Éireann declines to give the Bill a second reading on the grounds of social justice and economic responsibility, and in particular because—
(a) in departing significantly from the terms of the Budget as outlined in the Financial Statement by the Minister for Finance in March, 1982, it confers concessions solely on the relatively well off, while giving no equivalent concessions to the low-paid as was proposed in the Family Income Supplement provisions of the Budget presented to the House in January, 1982,
(b) in granting concessions in regard to PRSI, it does so in such a way as to give maximum benefit to the well-paid, and little or no benefit to the low-paid,
(c) it aggravates national economic difficulties by measures, in regard to payments in advance of Value-Added Tax and Corporation Tax, which will cause losses of jobs in many vulnerable businesses, and will worsen the national budgetary situation for 1983 by using up revenue that would otherwise be available in that year, and
(d) it does not provide for any long-term reform of the PAYE system as was contained in the proposal for the introduction of a system of tax credits in the January Budget, while it fails to seek other sources of revenue by abandoning any proposals to reduce tax avoidance through discretionary trusts.".
—(Deputy J. Bruton).

Before the debate was adjourned I was referring to the contrast between the January budget and the budget introduced subsequently so far as the provisions for discretionary trusts are concerned.

The rate proposed in the January budget was 3 per cent on the establishment of such trusts and a further 1 per cent thereafter. The purpose of the measure was to stop tax avoidance and I very much regret that the proposal was deleted from the March budget. As we know, the Revenue Commissioners do not keep any register of discretionary trusts. There is no register for the purpose of capital taxation since the trusts have not been liable to date to a tax on capital. The only information available to the Revenue Commissioners in regard to these trusts was in respect of the years 1975 to 1977 when the wealth tax was in operation and applied to discretionary trusts. The number of such trusts ranged at that time from 1,615 in 1975 to 1,316 in 1977. Since we are talking of a measure of capital taxation it is of critical importance to examine the amount of money which would have come in and that is merely from what are now estimated to be in the region of 1,500 to 1,600 trusts. We would have got £4 million in 1982 and £2,500,000 in 1983. That is on a mere 3 per cent of their establishment and a further 1 per cent thereafter which is about the lowest rate of taxation that one could have brought in. It was an exceptionally low rate.

Again, we are back to the question of the contrast in our society whereby while no PAYE worker or other employee has the slightest opportunity of escaping the tax net — he has a computer number on his income — yet these trusts have been set up by perhaps the 2,000 wealthiest people in the country. The trusts have been set up deliberately and the incomes of the people concerned have been paid into the trusts largely for the benefit subsequently of their families. As such, the trusts are not liable to tax on the capital disposed of in this manner.

The injustice of this is evident and it is clear from the estimated revenue figure I have given — £4 million from 2,000 people is a lot of money even at a rate of 3 per cent — that even they will have been subjected to considerable exemptions and reliefs in the normal course on a fairly wide scale. Therefore, the intention to tax only in circumstances where the person is no longer alive and where the beneficiaries would probably be over 25 plus the deliberate deletion in the budget of what we had proposed was a retrograde step. There is little doubt that a substantial yield could be realised if the levy were imposed across the board and if there were no exceptions. Equally, I would make the point that perhaps the Minister might consider that the use of limited private companies as trading or investment vehicles results frequently in substantial losses of revenue. I would ask him to advise the House of the extent to which amending legislation could be introduced which would enable the Revenue Commissioners to treat the private company and the shareholders as one entity, they being subjected to the maximum income tax rate. There are aspects relating to the taxation of private limited companies which are clearly avoidance measures.

I am unhappy with the extent of the exemption limits per capital gains in section 32. I am surprised that the Minister decided to quadruple the £500 exemption limit to £2,000 and for a married couple — whatever definition one uses for married, presumably an individual and a spouse — it is also quadrupled to £4,000. There should be some degree of indexation, perhaps from £500 to £750 which would be more than generous in the light of the history of the £500 limit but certainly I could not agree to a £2,000 exemption limit. The amendment reduced the effect of capital gains receipts for the Exchequer and, as I indicated earlier, these receipts are currently miniscule and hardly worth the while of the staff employed in collecting them. An enormous amount of work must be done to collect the receipts in terms of appeals, counter appeals, special hearings and so on and it is hardly worth the effort of the Revenue staff to chase a few million pounds. The rates are very small and we are all aware that the staff involved in collecting the receipts would be better off engaged collecting arrears of VAT or PRSI payments. Quite an amount of arrears are outstanding at present. That does not diminish the argument that we should have an effective capital gains tax system. The existing staff deserve our sympathy, exercising so much energy to chase so little. I am unhappy about that section and many other Members should be concerned about the excessive relief given.

The Minister should consider introducing a special land development levy. Had I the opportunity I would have introduced such a levy. I believe that land that is zoned under the current draft development plans of local authorities should be levied to the tune of £8,000 per acre if rezoned, with or without disposal. We are all aware that land after it is rezoned may not be transferred for many years afterwards but if we introduced such a levy it would put a curb on some of the outrageous rezoning decisions currently going on, particularly in County Dublin. Those who manage to convince a local authority to rezone land would then have to pay a levy of £8,000 per acre. We are all aware that where rezoning is agreed a local authority enters a quasi-constitutional obligation in the years ahead to provide the moneys for infrastructural development for such land and that there are mass speculative gains from it. If a person holds on to the land and sits on it as an asset that person is not liable to capital gains tax. That person should be caught at the point of zoning. I should like to tell the House that between 1972 and 1982 about 8,500 acres of land in County Dublin were rezoned. In the last 18 months about 4,000 acres were rezoned. For the most part that was agricultural land rezoned for industrial, commercial or residential use.

We are all aware that local authorities have power to impose a development levy at the point of development. Where a developer wants to proceed the current development levy is about £4,000. I would put that levy on at the rezoning stage. If a person wants to make an application for rezoning either by way of material contravention of a development plan or by way of gaining on rezoning I would slap the levy on. I would give that money from the Exchequer to the local authorities to form part of the urgently needed funds for local authorities. Local authorities are starved of money for road development, sanitary services development and basic infrastructural development. That kind of money could easily accrue to the Exchequer because all that is necessary is for local authorities to be obliged to keep a register of any land where zoning has changed. That register could be supplied to the Revenue Commissioners who would impose a straightforward £8,000 development levy.

Section 77 provides for the collection of VAT at the point of importation in respect of imports by registered persons. It is significant that the Minister today told us that the current budget deficit would all be swallowed up by the middle of the year. That is the most astounding statement I can recall hearing since I became a Member and, perhaps, since the foundation of the State. I cannot recall a Minister for Finance telling the House that we had budgeted for a current budget deficit of £675 million and all that would be gone by 30 June. That is a most amazing admission. It may be that the accelerated payment of VAT will not be collected after all. One can read many things into this.

The Deputy should read the second part of the paragraph.

The second part is illuminating also. In the course of his speech the Minister said:

Broadly speaking, however, the deficit by end-June should be of the order of 100 per cent of the figure for the year as a whole and this figure should be significantly exceeded by end-September. As I have said, the real impact of extra tax receipts will not be felt until the final quarter of the year particularly because of VAT on imports. In that quarter revenue should significantly exceed expenditure and thus ensure that the budget targets for the year as a whole are achieved.

Does that include the deficit? In three weeks' time the whole deficit for the year will be gone. That is phenomenal.

That is what the whole paragraph is about.

And, presumably, by the end of the year it is hoped to be back on target. I have doubts about that. If one talks to manufacturers and owners of companies one learns how severe their liquidity problems are. We have spent some time here speaking about Fieldcrest where 650 people may lose their jobs tomorrow morning. So severe are the liquidity problems with some other companies that we may have a deceleration rather than an acceleration of a month's payment of VAT. Frankly, I do not see £140 million coming in in the months from September to December next. The Minister will be doing extraordinarly well to accelerate about £40 million or £50 million.

The Minister must also accept that Post Office receipts are down. There has been a decline in such receipts. That is not surprising when one considers the rates we charge, the second highest in Europe. I doubt if the budget deficit target will be achieved, and the measures proposed are regressive. If a person wishes to bring in a colour television set or a video machine or millions of pounds worth of cosmetics I have no objection to a levy on that. It is hard to realise that £52 million is spent on cosmetics annually. I have no objection if people wish to bring in expensive motor cars and pay full VAT at point of importation, as well as duty, but about half of what the Minister is trying to get is concerned with the raw materials of industry. About £65 million of the £140 million is directly related to productive raw materials used in many cases for reexport. This is where I am greatly concerned about the impact of the accelerated payment and the payment at point of entry.

In relation to the Finance Bill, the Minister should take his courage in his hands on the famous or notorious section 84 loans of the Corporation Tax Act, 1976. I have outlined a number of ways in which we can get money here today. I have said that we need about £100 million of capital tax which we could get with a tough regime. I am quite convinced that we could get £60 million out of the farming community which is about 10 per cent of the moneys they get from the Exchequer and the EEC. They get about £300 million a year from the Exchequer and £300 million a year from the CAP. I am quite convinced that we can bring in another £20 million or £30 million on other aspects of VAT particularly on luxury goods. If we abolish the section 84 loans, which are a tax evasion and avoidance measure, we could bring in another £20 million. The discretionary trust side is good for another £6 million or £7 million. Deputies of any of the political parties should not stand up in Dáil Éireann and scream blue murder for tax relief on this, that or the other unless they are prepared to say where the money is coming from on a concomitant basis, otherwise we simply borrow abroad and go on a merry-go-round into financial bankruptcy.

Section 84 should be examined and perhaps should have one modification. As far as I am aware, a substantial number of private companies in Ireland — agricultural co-operatives, for example — avail of that device, to use a polite term. The facility should apply exclusively — if at all — to employment-creating, productive sectors of manufacturing services. This would dampen down the measure in which the device is used at present. Preferably the loophole should be abolished altogether. I am opposed to the commercial banks availing of this device and to the mechanism being used by the commercial banks to confer benefits on particular companies. We should have it amended as quickly as possible, but the IDA may well have reservations about it being amended, all of a sudden, on the grounds that a number of companies have taken up operations here and are already benefiting from it. If we cannot abolish it now and have the revenue accrue directly to the Exchequer, we should amend it so as to have rigorous control on it.

Regarding the bank levy and section 83, this levy is charged on the current deposit accounts of each bank subject to certain adjustments including a £5 million threshold. The proposed rate of duty in the Finance Bill, 1982, is 0.2 per cent on the first £100 million of taxable resources and 0.35 per cent on the remainder. In the light of what some of the commercial banks have been doing in recent months, particularly in relation to one major construction firm where they could lose £30 million by virtue of appalling bad management internally, I would be inclined at this stage, despite the fact that it is not the best form of taxation, to sting them for another £20 million. They deserve it and they deserve that the State should take, for example, not 0.2 per cent of the first £100 million of taxable resources but 1 per cent, and I would make the 0.35 per cent on the remainder 1 per cent also and have it 1 per cent across the board. That would bring in about £50 million.

I know that the banks are violently opposed to this method of levy, but to quite an extent in recent years the commercial banks have been loaning money on speculative projects without apparent collateral, apparently on money deposited by Irish citizens in their own banks, and have been losing the money. If they can afford that kind of mis-investment I am not too sure that I would be unduly worried at this stage if the State were to take another £20 million or £30 million and to say "We will look after it far better" and in a sense teach some of their investment managers a lesson. That is fairly sharp and harsh and the levy system is certainly not the best form of taxation. It has disadvantages and opens up an area of considerable uncertainty, but I have felt very strongly about the way in which commercial banks have used scarce national resources for some speculative activities. I am surprised that the Central Bank have not been more rigorous and forthcoming in their control mechanisms which they are prepared to operate apparently with very considerable rigour when it comes to ordinary overdraft facilities. But major companies can, without a tittle of consent from the Central Bank, obtain moneys of that nature from commercial banks. In that regard the Minister should examine the whole structure of the board of the Central Bank. The commercial directors on the board of the Central Bank should not be nominated by the associated banks but by the Government. It is a very fundamental and far-reaching change which would be necessary in other legislation into which I do not want to go today because it is slightly outside the ambit of this Bill, but measures of control are necessary.

These are some of the suggestions I would make. I welcome the fact that the Minister, in relation to short-term capital gains, has retained the 60 per cent charge for the first 12 months. Undoubtedly, that is to be welcomed. It is necessary and effective, and perhaps it is arguable — indeed, quite arguable in some respects — that the rate of capital gains in relation to land transactions should be higher. I would be inclined to suggest that in certain aspects it should be much higher. For example, take the 50 per cent rate. An acre of agricultural land in County Dublin at an existing land use value of about £3,500 would have a site value on rezoning of about £35,000. At the moment that land is subject to a development levy of about £4,000. If you deduct from £35,000 a levy of £4,000 and £3,500 original site value and put a 50 per cent tax on that, that tax works out at £13,750. The net gain is still a solid £13,750 per acre to the person directly concerned, assuming that tapering relief and roll-over-relief will not apply. I do not regard the measures introduced by the Minister as being penal. The 60 per cent rate is just about right and in some respects I would nearly go to 65 or 70 per cent.

One of the big problems in relation to taxation is that the whole taxation base is too narrow. Consideration must be given in the long run to the question of a property tax. People will say "there they go again" but we must get away from the system of taxation which is based solely on VAT, income tax and booze. We must have some form of property tax. I am not suggesting rates. A person's private dwelling should be exempted up to a certain limit of value. Those on low incomes would naturally be exempted. The value of a person's property should be reflected to a degree in the tax return. In case people would think that I am being unduly extreme in this matter, I would point out that in Canada about 12 or 14 per cent of all State revenue comes on that side and in America about 15 per cent of revenue relates directly to property. If someone owns a property worth £100,000 he might get an exemption up to £40,000 and he would pay some form of tax, say 1 per cent, on the balance. We have abolished almost every form of taxation except the three I have mentioned and as a result we cannot run the country properly.

In regard to VAT on luxury goods, there are some other items which might be considered. Last year we imported about £25 million worth of jewellery, clocks and watches. I mentioned cosmetics earlier and the estimated revenue this year under that heading is about £60 million, a substantial sum if VAT were to be imposed at a differential rate. We are wealthy enough to import £3 million worth of fur skin articles and these should be subject to a higher rate of VAT.

PAYE contributions amount to about 18 per cent of the total wages and salaries of those who pay tax under this system. Only 1.75 per cent of the income of farmers goes in tax. The self-employed pay about 6.8 per cent. Corporation taxes as a percentage of non-agricultural profits amount to 12.5 per cent and capital taxation amounts to 1.3 per cent. In fact, capital taxation as a percentage of total revenue is only 0.5 per cent. Indirect taxes as a percentage of personal consumer expenditure are very high at 17.6 per cent and VAT as a percentage of personal consumer expenditure is 9.5 per cent.

We must eliminate the more glaring aspects of poverty. Many old people live alone in appalling conditions. Six out of every ten such people do not have not water in their dwellings. Those of us who grew up accustomed to having this facility may not appreciate this fact. In 1980 one out of every ten people living alone did not have electricity. A socially just Finance Bill could eliminate these appalling anomalies. Three out of every ten people living alone lack the basic water amenities such as a flush toilet, washhand basin, kitchen sink, bath, shower and hot water. That is the reality of social segregation in housing policy, yet we give tax relief on mortgages and so on.

I am quite convinced that there will come a day when we will have a Finance Bill which may prove intensely unpopular but which will be of major benefit to the economic and social advancement of the country. This can be done without having a balance of payments deficit of £1,300 million or 13 per cent of GNP as we had last year. We can have a Finance Bill which will not lead to the payment of interest on the national debt, as a percentage of each pound of income tax revenue, of no less than 76 per cent, as was the case in 1981. Our foreign debt last year was £3,740 million and our domestic debt was £6,560 million. I am convinced that in 1983, 1984 and 1985 we can introduce Finance Bills that will not result in the current debt service cost of a payment of no less than £1,424 million. It is an appalling figure by any stretch of the imagination. Equally I am convinced we could have introduced a Finance Bill that would not result in 1982 in the cost of servicing our outstanding external debts, where interest payments alone amount to £479 million and where capital repayments amount to £423 million. We could do all these things provided we had the political leadership and did not waste our scarce resources that are collected by way of the Finance Bill.

In 1981 a total of £72.7 million was spent on drugs and medicine and 95 per cent of those items were imported. There is an appalling waste of money in this area. We are spending £300 million per year on unemployment-related expenditure. We are spending £350 million on security: the Border alone will cost us £90 million. We are spending £850 million on health services, but there is a lot waste and inefficiency in this area. We are spending £750 million on social welfare. With regard to disability benefits, I must point out that there is a degree of waste in this area.

In conclusion I say that if we face up in the lifetime of this Dáil to the major budgetary and financial crises facing us, I am convinced we can put things right. We can build a future for our children and a taxation system of which we can be proud. We will at least have a worthwhile legacy to leave our children, even though we may have mismanged our business over a long period.

My contribution will be brief. Unlike Deputy Desmond, I will not conclude several times.

My apologies.

I thought the Deputy would never wind up his contribution. I congratulate the Minister for Finance for the decisiveness and the brevity with which he delivered his speech this morning. Since he became Minister for Finance he has dealt with matters clearly, with strength and determination and, unlike his predecessor in office, he has been prepared to show flexibility in his approach. The previous Minister for Finance, Deputy Bruton, and the leader of his party did not show any flexibility whatever when they presented their proposals to the Dáil in January but immediately afterwards they twisted and turned in an effort to retain office. That seems to have been overlooked by many political commentators, as was pointed out by Deputy O.J. Flanagan quite rightly when the new Dáil resumed. There was a campaign of villification against Fianna Fáil, its Ministers, its leader and Deputies.

I consider I have been elected on the programme outlined by Fianna Fáil in 1982 and the alternative budget. The Minister for Finance made the necessary adjustments in the Finance Bill and I agree with what he has done. The statement he made this morning contains in the medium-term an economic plan which he proposes to introduce shortly and it will contain many earlier suggestions made not only in this House but in the parliamentary party.

All over Europe governments are run on the most narrow margins of support. It requires great political skill to maintain the support of the various groupings within the governments concerned. This is the situation in Denmark, Sweden, Finland, Norway and in other European countries. We have been elected by the people quite recently. The people have spoken and they expect us to make the system work. Certainly one individual can be villified more than other people. Newspaper correspondents such as Conor Cruise O'Brien on a weekly basis not only in a national newspaper but also in a British paper have villified Fianna Fáil and its leadership. It has been a revolting performance.

At the end of their column other correspondents should state clearly what is their political point of view and let the people judge them on that basis. At least when Conor Cruise O'Brien writes in newspapers we know he is a former Coalition Minister and we know what his politics were in the past. We know the conflict of personality between him and the leader of our party, Deputy Haughey. We know Conor Crusie O'Brien blames his political demise on Deputy Haughey, but there are other correspondents who have not done what Conor Cruise O'Brien has done and who are writing these dreadful commentaries on Fianna Fáil and its leadership.

I am afraid I will be taxing the Deputy's ingenuity in asking him to relate what he is saying to the Finance Bill.

I do not think the Chair will be taxing it to any great degree. The finances of this country depend on the type of people leading the country. The utilisation of our resources is based on the leadership that we have on the day the Finance Bill is introduced in the House. It is in that context that I am entitled to speak of the crisis we have now in the media, the total campaign against Fianna Fáil in the media. We have to make it clear to the people and the media have a responsibility to make it clear to the people what their views are, what their political outlook is. We have seen an exposé in Magill magazine recently about certain elements working within the television media here. At least now we know the background——

The Deputy may feel the need to express these thoughts but perhaps he should wait a more suitable opportunity. We should endeavour not to stray too far away from the taxation measures that are proposed here.

I accept the ruling. I just wanted to refer to the overall context in which this Finance Bill has been put before the House. It is fair and reasonable that we should look at the overall contest, at the leadership, at the commentators and the people who are trying to draw attention to so-called divisions within our own party. They forget Deputy Kelly, who went into exile on the other side to try to wrest the real Fine Gael from Deputy Garret FitzGerald. They forget the divisions within the Labour Party between Deputy Higgins and between Deputy Cluskey and others. They forget these things conveniently, but these are the same political strains evident in any political party. Yet they choose to concentrate on the personality conflicts within Fianna Fáil almost to the exclusion of what is obviously happening on the other side of this House.

The alleged ambitions of Deputies or groupings in any political party are not relevant to the taxation measures before the House. I would appeal to the Deputy to contribute as I know he can, in a more relevant fashion.

First, I would like to make a brief perusal of the statement the Minister for Finance made here. It shows the very deep concern felt by all the people in this House for a fair and more equitable taxation system. Deputy Barry Desmond was courageous, if that is the word, in that he came out strongly in favour of PRSI and its benefits. Let me remind the House that the breakdown of payment of PRSI is approximately 50 per cent from the employer, 20 per cent from the employee and 25 per cent from the Exchequer. Ultimately all the benefits of PRSI will return to the people who have paid the 25 per cent. Those benefits will come in the form of pensions, in caring for the old, the disabled, the less well-off in our community, the more deprived in our community. I admire Deputy Desmond and those politicans who have the guts to stand up and support PRSI in the face of the opposition there is to it at the moment. It is an unpopular tax, it has some inequities in it and the Minister for Finance has recognised those inequities and has made the necessary adjustments. There is no point in bewailing the necessity to look after the less well-off in our community. It is absolutely necessary and I do not think anybody would stand up on a political platform and say that the pensioners and the unemployed and all the others should not be given the benefits of what taxation we can raise on their behalf.

One of the problems, of course, is the enormous rate of evasion, the enormous rate of manipulation of the social welfare system by those quite capable of working, by those collecting social welfare benefits and doing tax free jobs. Nobody would deny that this is a very serious problem. The people responsible for manipulating the system have not been pursued strongly enough by the Department of Social Welfare, who are far too inclined to say that such an individual is entitled to social welfare benefits without examining the problems or the need of that individual.

In the final analysis what is needed is a breakdown of the unemployment figures. There are a number of categories: the chronically unemployable, who for one reason or another cannot be retrained; the people who are genuinely unable to find work — the great majority of people out of work want work and it is unfair to categorise those people with the fiddlers — there is the chronic fiddler, the man who has been able to pull the three-card trick on the Department of Social Welfare, who comes down from working on the roof of the Garda barracks, collects his social welfare benefits and goes back to work on the roof. We have heard that story before. Those are three categories and they should be analysed in that way. There is perhaps another category that might be considered, the school leavers. The whole spectrum of the unemployed should be looked at and a proper analysis of their situation should be made.

There are others, of course, that we hear very little of. Most of the talk is about those who are abusing the social welfare system, and that is a serious and criminal act. But we hear very little about those people who make large profits in business. I do not begrudge them their profits but I do begrudge them their very expensive tax accountants who can advise them on the loopholes. It is loopholes up there and chiselling and cheating down there. That is the difficulty. The tax accountants come in and advise on loopholes and that £.5 million can be made here or there or that tax can be avoided here, that money can be moved from Ireland to the Isle of Man and so on. We hear very little about this. I would urge the Revenue Commissioners and the Department of Finance to pursue this matter more actively. Politicians have often been called the second oldest profession in the world. Like the first, politicians will no doubt continue for a long time. At least I hope they will; otherwise we will have anarchy. We must protect our freedom and ensure social justice for all.

I spoke recently about the situation in which the PAYE worker found himself, with his standard of living rapidly worsening because of increased taxation in almost every area. Deputy Desmond referred to a number of areas, and I support his approach to some of them, but he overlooked the real issues which require political decisions. As I said in the budget debate, those political decisions require that we consider further State intervention in areas such as fisheries, which has not made any impact on the economy, the fish processing industry and our marine fleet, which is totally inefficient although we have great wealth in our seas which we do not utilise. If we invested in these areas we could reduce the tax burden which falls on a very narrow base, that is, the PAYE worker, farmers, financial institutions and so on. Our mountains could be developed and forests could be created to provide the timber needed for industry. State help could also be given to the meat and food processing industries.

Recently I was in a hotel in the midlands and got a beautiful sirloin steak, tinned vegetables and imported potatoes. The midlands is the richest part of Ireland and yet we cannot get fresh Irish vegetables. Why are the farmers not growing vegetables? Why are the hotels not growing their own vegetables? Because, in my view, they are dependent on State grants and are not prepared to make any effort to help themselves. The Government have gone as far as they can in providing aid for farmers who are not getting a good return from their land. During the last war Eamon de Valera imposed a tax on farmers who did not cultivate their land and produce food. The Minister might consider imposing such a taxation. I see nothing inequitable about that. As President Mitterand said recently, we are switching into a wartime economy whether we like it or not and we will be in serious trouble unless we take radical decisions. We appear to be playing with monopoly money, transferring from one taxation system to another, creating new systems of taxation, but with the same money going round in circles. We are creating confusion in people's minds.

In Dublin we have the entire public service system. There is urgent need for decentralisation. We should open up areas to ensure that young people coming into the public service are given an opportunity to work closer to their roots and the environment they understand best. That makes good economics and good sense.

Deputy Desmond spoke about putting another 10p on beer and 15p on cigarettes which would raise a certain amount of money. We are spending £2 million a day on drink. I think much less money would be spent on alcohol if pubs provided food and developed along the same lines as in Britain and in Europe. If they do not provide such a service, public opinion will insist on it, because it is very essential. The campaign launched by restaurant owners to be allowed drink licences has a great deal of merit. It has been proved that a person who has taken too much alcohol and has not eaten enough can cause fatal accidents.

There is tax evasion everywhere. Our doctors charge £7 or £8 a visit and if a person pays him ten visits it can cost £70 or £80.

The Deputy does not appear to realise he is sitting beside his illustrious colleague——

Deputy O'Hanlon is a most honourable and decent man and I am sure it would not cross his mind to do what I am talking about but there are many less gentlemanly doctors who would put that £70 cash into their back pockets and would not return it to the taxman. To overcome this problem might I suggest that on production of a medical receipt these expenses be allowed against income tax? This would ensure that the PAYE worker could claim his medical expenses against income tax, and the doctor would pay his fair share of income tax. We have grown men in wigs and gowns who strike fear into the hearts of the people unfortunate enough to have to go to court. In this day and age these men are charging enormous fees for carrying out public inquiries. I suggest they take off their wigs and gowns and get down to the work they should be doing, that is administering the law. We should look at this area too. Recently we witnessed a foray by the Fine Gael law fraternity who were protecting their own interests when we were discussing the Family Courts Bill. A fear seemed to exist that these cases would be transferred from an upper to a lower court and made more accessible to the general public. There was impatience that suites had not been provided in which the district judge could consider the relevant family law issues. We had the amazing scene of three or four Fine Gael lawyers badgering the Minister for Justice, seeking to retain their privileged position. I was appalled and embarrassed at the situation and said so to the House. I hope never again to see a scene of that kind.

I could talk on for a considerable time but wish to be a little more relevant to the Finance Bill. It strikes me that the political correspondents of this House should look——

The Chair has been tolerant about references to wigs and gowns, even though they do not relate to the Finance Bill. However, I would ask the Deputy not to return to the subject of political correspondents, because that is irrelevant.

I made representations, on foot of the budget, to the Minister for Finance and am glad that many of those representations have been included in the adjustments made in the Finance Bill. In my constituency, a great number of people are provided with a company car and the Minister has made a welcome adjustment in the use of a company car. These are mostly young people, managers who work long hours in industry with no overtime pay and no other privileges or perks, the allowances for entertainment and so on having been eliminated. It is legitimate that a company car, used mostly in the interest of the company, should not be taxed at the rate originally suggested. I am not altogether satisfied with the modifications made for the future benefit of an employee for private use of the company car, but the Minister has gone a long way and, when the moment arrives, he will make the necessary adjustments.

The Minister states:

In the case of bona fide car pooling arrangements, there will be no charge to tax in respect of any incidental private use.

This is a welcome arrangement and allows for a great deal of flexibility. The proposal to grant income tax relief to elderly persons in respect of private tenancies, which is contained in section 5, is also welcome. The Minister indicates that the relief will commence from 1983 to 1984 and be based on the rents paid in 1982. The maximum amount on which relief will be granted is £500 in the case of a single or widowed person and £1,000 in respect of married couples jointly assessed. Perhaps the Minister, in the next budget, would consider increasing that amount. Realistically, it is not all that it should be and I hope for a great improvement here.

Other speakers wish to speak about the budget in general so I shall conclude by saying as I said earlier, that I have no argument with the expenditure being made for Dublin city, some of which is contained in the Minister's statement today. Deputy Gregory was right in seeking and getting what he sought from the State and the State are entitled to a capital city which befits the name capital. Deputies Gregory and Haughey reached an amicable and excellent agreement and I hope that nobody in this House will jeopardise that agreement, in the present or any future Government. The inner city has for so long been neglected and any money spent on it is well spent. Even the former Taoiseach, Deputy FitzGerald, felt there was a great deal of merit in this expenditure but could not quite comprehend how the man in the street would relate to Deputy Gregory when Deputy FitzGerald made it clear before the general election that he could not accept these proposals.

The merits of the Fine Gael Party have not been properly analysed on the basis of Deputy Kelly, the leader in exile, waiting to wrest back the party from those who have stolen the heart of Fine Gael, the old conservative christian democrats, to bring it back to reality, to the extreme right where it belongs and has always belonged, whose heart is contained in Deputy Kelly, Deputy O'Donnell, former Deputy Mark Clinton and others. If the media examine the reality of what is happening in the various political parties, they will realise that every statement made by Deputy Kelly is in almost direct contradiction of what his leader has said in the past and is saying at present.

In the Labour Party, Deputy Quinn went around with the Fine Gael label on one lapel and the Labour label on the other — a true Coalition Member. Why not? He got in on Deputy FitzGerald's surplus votes and transfers. We see the honourable chairman of the Labour Party, whom I greatly admire and respect, Deputy Higgins, trying to wrest the soul of the Labour Party from the right wing to the moral standing which it had, or should always have had in the past, from the "mercs" and "perks" brigade, to those concerned with the real issues, with social justice and not just with office.

Deputy Desmond referred to bank profits. I wish to refer briefly to bank interest rates. Our industry is being crippled. Money is not available to the industrialist and to the young person who wants to start up in industry. The Government have taken steps to get loans from foreign banks at reduced rates of interest, 10 per cent in Germany, and 11 per cent or whatever the prevailing rate may be in continental countries. But this is quite inadequate for young people who want to start up factories or new ventures. The banks are now charging 21, 22, 23 per cent and in some cases 28 per cent. Capital as a commodity is not available to them and this will have to be dealt with resolutely by the political parties.

I congratulate the Minister on his brevity. Perhaps I have been a little less brief. I wish him success and offer him every support in bringing about a resolution of the problems in our economy. I have every confidence in him and in the Fianna Fáil Government and in the people of Ireland to provide for the future. We have the natural resources, the ability and a highly-trained workforce. All we lack is capital and this House is entitled to intervene in the areas I have already mentioned — agriculture, forestry, fisheries, tourism and all the others — to ensure that the national wealth is made available to all the people. Our people have the capacity and the willingness. All they want is to be told the truth and given direction and, like de Valera, the leadership will bring us through these difficult times to better days ahead.

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.

This is a very unusual year in so far as we have had a second budget presented a few months after the first. The present Government had to come in here a fortnight after the Dáil resumed following the election and present their budget. It is extraordinary that some speakers on the other side of the House are so critical of that budget, seeing that most of it was what they themselves had planned for the three, four or five months necessary to plan such a budget. The Minister here today when introducing the Finance Bill said that it would reduce our borrowing needs and improve employment. It is essential that we work towards that. We are living in difficult times and nobody denies that. In 1981 the economic growth in the OECD countries dropped to one-third of what it was in 1979 and world trade in the same year fell to one-seventh of what it was in 1979. Unemployment is rising not alone in our country but throughout western Europe. It is expected that 11 million people will be unemployed in western Europe by the end of this year in the EEC countries, some of which have not experienced any unemployment since the last world war.

This morning the Minister spoke about borrowing. It is interesting to listen to speakers on the other side of the House. Listening to them, one would feel that borrowing for current deficits commenced with Fianna Fáil. That is not so. In 1973 the Coalition Government had two choices when the price of oil escalated rapidly. They could either pay their way and reduce the standard of living somewhat, or they could borrow. They decided at the time that they should borrow. With hindsight one would have to question whether this was a good idea, but the borrowing started then and, as the Minister pointed out, we must cut down on the level of that borrowing and that is what he proposes to do both through the budget and the Finance Bill.

Borrowing for capital purposes is a different matter, as long as the money is being borrowed for a worthwhile project. Our infrastructure is grossly underdeveloped. To take a few examples, all our national primary roads lead either to or from Dublin and a great need exists for some major roads going east-west across the country. I suggest to the Minister, who is a Sligo man, that a very worthy project would be a major road from Sligo to Dundalk and on to Greenore Port. This would open up all that underdeveloped area from Donegal across the north-west through Cavan, Monaghan and Sligo, for industry and tourism and it would facilitate the people who live in that area. More important is the problem of the amount of traffic in and out of Dublin, particularly the heavy traffic going through the port of Dublin. If Carlingford Lough were developed the EEC might look at it in the context of cross-Border projects, and if the port of Greenore were developed — it has a low-water depth of 40 feet — it would take much of the heavy traffic which is causing many of the major problems in the city of Dublin at present.

There is provision this year of £230 million for telecommunications services. This is a welcome development because there has been criticism of this service in the past. People should not be critical of borrowing money for this purpose. The Minister for the Environment has provided a welcome addition to funds to increase the output of local authority housing. There is provision in the Finance Bill for tax relief on money spent on the preservation of buildings of architectural or other value.

There is much concern about the whole question of taxation and the Commission on Taxation will publish their first report in the near future. Many people believe we have reached a stage where we cannot accept any more taxation and that there must be a fairer and more equitable means of raising revenue. The Minister pointed out this morning that the amount of tax we pay is in keeping with other European countries, but I hope that the report of the commission will lead to a more simplified tax code.

The tax relief of £312 has been mentioned by several speakers, as has the whole question of PRSI. Deputy Manning said that the Minister did not state how he would finance this allowance of £312. The Minister said this morning that the PRSI tax concession of £312 would reduce tax revenue by £45 million this year. He went on to state:

I have said previously that this has to be made good. A major review of Departmental expenditures has recently been completed and the results of this review are now being evaluated in my Department. It is hoped that this will provide substantial savings but, if there is still a shortfall on the £45 million, then I will consider taxation options.

It could not be more clear that the Minister intends to stick to his original target and to reduce our level of borrowing.

The level of PRSI contributions was raised by 2.75 per cent, of which 1 per cent is for the Youth Employment Agency. Nobody can deny that this is a very worthy cause. The remainder goes to the social insurance fund and it is important to recognise that this fund exists for the benefit of employees who contribute to it. From this fund contributory pensions, disability benefit, invalidity benefit and unemployment benefit are paid. The amount raised through PRSI is supplemented by over £200 million from the Exchequer. The benefits are there for those who pay into the fund.

The budget provided a welcome increase of 25 per cent for those in receipt of long-term benefits. It is important that we look after those who are dependent on social welfare and those who are less privileged. It is not always appreciated that many of the benefits available here are better than those in Northern Ireland and the United Kingdom. It was often said in the past that we were far behind Northern Ireland in regard to social welfare and that this made it unattractive for people there to join us. Disability benefit here amounts to IR£31.65 while in Northern Ireland it is £22.50. Even allowing 20 per cent for the change from sterling, we would still be far ahead. Children's allowances in Northern Ireland are £5.25 whereas here the amount is IR£11.25 per month for the first child and IR£17.50 for the second and subsequent children. These are some examples of how a person is better off on this side of the Border than on the other side. A married man with three children in receipt of disability benefit here receives IR£84.46 whereas in Northern Ireland he would receive £54.55.

Deputy Manning was disappointed that, unlike the Coalition budget, there was no proposal to tax short-term social welfare benefits. The social welfare system needs to be examined but it would be very difficult administratively to tax short-term benefits and it would add tremendously to the work of the Revenue Commissioners. It is debatable whether such a measure could be implemented. Certainly something must be done about the number of people receiving unemployment payments. There should be a proper assessment and perhaps officials from the Department of Social Welfare and Manpower could carry out a pilot project in a specific area and interview all those who are receiving unemployment payments. Many people through no fault of their own are forced to live on unemployment assistance. Those who are elderly might not now be fit for work. Such people might more appropriately be catered for by a medical certificate than by signing on every week for unemployment assistance. We must find out the number of people who are genuinely available for work because it is only by having this information that we will be able to create the jobs that are so necessary.

In the area of social welfare services the question of the means test must be considered. None of us is over-enthusiastic about the concept of a means test because it is looking into the private affairs of an individual.

The Deputy is moving into the realm of social welfare. While other speakers have made passing references to matters outside taxation, I am asking the Deputy to stay as closely as he can with the Bill before the House.

The means test is important in the general context of eligibility for all services. It is important that we have a means test at the moment but an officer from one Department should have responsibility for the matter. At the moment a number of people investigate means. Officers from the Department of Social Welfare, community welfare officers from the Department of Health and officers from the Department of Education all carry out investigations in respect of the means of applicants. It is my view that in respect of the entire range of services available there should be only one means test and that survey should be carried out by one Department.

The greatest challenge facing the Government is the creation of employment. Today the leaving certificate and intermediate certificate examinations started for almost 100,000 young people. It is a great challenge to the Government to ensure that jobs are created for those leaving school this year and also for young people who have already left school but have not yet got employment. Chapter VIII of the Finance Bill has a provision in respect of deduction in computing trading income. It is stated that an amount of £10 per week will be allowed for each employee from 1 July 1982 to the end of June 1983. This provision is welcomed.

There are benefits for agriculture in the Finance Bill and there are tax credits for banks who are aiding farmers in severe financial difficulties. This provision is to be welcomed. Farmers have had difficult times in the past few years and any support for them is worthwhile. The price increases negotiated by the Minister for Agriculture are to be welcomed. They were a great achievement having regard to the circumstances, particularly the opposition from our neighbour across the water. An increase of 11 per cent was a considerable achievement this year.

In further negotiations in Brussels, I ask the Minister for Agriculture to try to have the entire country put in the category of severely handicapped areas. I ask him in particular to give special consideration to the 12 western counties where farmers work under an extra hardship. I believe an application is being processed at the moment in respect of the more severely handicapped areas and I ask the Minister to ensure that the entire country is included in this category.

Section 85 of the Finance Bill deals with the removal of stamp duty on gifts of land and this is most welcome. Of particular interest in my constituency is the reduction in VAT on furniture from 25 per cent to 18 per cent. We have a considerable furniture industry, including a number of small family-owned industries with an employment figure of 800 persons and the reduction in VAT was much appreciated. Concern has been expressed about VAT on imports at source but I appreciate there will be one advantage in that it will remove the advantage imports have over domestic products. I ask the Minister to monitor how VAT on imports at source is working and if is creating unnecessary hardship for native industry I ask him to ensure that something is done to rectify the position. This Government decided quite rightly not to impose VAT on shoes or clothing and this was welcomed. It was estimated that if VAT were imposed on shoes there would be a loss of 11,000 jobs in the shoe industry.

Section 70 of the Finance Bill gives effect to orders made in the budget in relation to increased duty. Much concern has been expressed to public representatives at the escalation in the number of exemptions granted during the years. Some 20 years ago there were 2,000 applications in one year but three years ago that number was as high as 44,000 applications. The Government will have to keep this in mind because it is causing concern in relation to work. If there are over 40,000 licences in a year and if there are a large number of late exemptions in a year, we will have people staying out until the early hours of the morning drinking and this will obviously have an undesirable effect on their capacity for work the next day.

The area along both sides of the Border has suffered from Partition. The town of Clones, for example, has the Six Counties on three sides of it and all but one of the roads are blocked and cannot be used. This has left the town without its natural hinterland. It is very important that new ways of developing this area should be found. The EEC funds have helped in many ways with various schemes, through the cross-Border tourist orientated projects scheme, which is worth £16 million to both sides of the Border, through some cross-border drainage schemes and through the western package. I would ask the Minister to ensure that this support from the EEC will continue for these very worthy projects and that more such projects will be introduced.

In conclusion, I would be very critical of the Coalition Government preaching doom and gloom both during their term of office and since they left office. What we need more than anything at this time is confidence in our ability to solve our own temporary difficulties. Deputy Manning said that those who went before us in this House were great men and I endorse those sentiments. More than anything else they instilled confidence in the people to get on with the job in much more difficult times. We have a lot going for us. We have a well-educated, articulate youth. Fifty per cent of them are under 30 years of age. We owe it to them to do our part in Dáil Éireann. The people must forget their own sectional interests. We must all work together in the Dáil and outside it to create the sort of country that we would all desire.

I listened with some attention to the Minister introducing this debate. What the Minister said in the House was a condensed version of the explanatory memorandum to the Bill. I had hoped that the Minister would have given us a little more of the thinking behind the measures that are being taken and indeed some of the thinking behind the measures that are not being taken at the moment, which seem to be almost as important in their own way as the measures that are being proposed, and that he would have tried to show us how the Government believe the measures in this Bill conform to any plan which the Government might have for dealing with the problems which beset us at the moment and which we on this side of the House are not the only ones to articulate. We may in fact have articulated them in more detail than the present Government but the Government appear from time to time to recognise and to want to do something about them. But we got no indication of what the strategy is. We got no indication of how the measures proposed in this Bill are designed to meet those problems. We have had no indication of what difference the measures proposed in this Bill would actually make to the economic situation of the country, to the employment situation or indeed to any of the other problems that would be raised by Deputies on all sides of this House during this debate.

The Minister said that he would refer briefly to the budgetary and taxation strategy which is being followed by the Government. He went on then immediately to say that he did not intend to give a comprehensive account and that this would be contained in the medium-term economic plan which is now being prepared. I am pleased to know that the Government are continuing with the preparation of a medium-term economic plan. This is something which we had set in motion and which we obviously need to guide our overall economic strategy for a few years ahead. But in addition to that we need a much more urgent and fairly coherent short-term economic strategy in order to deal immediately with the major problems we face. There is not much point in having a medium-term economic plan that will on certain assumptions allow us to make progress in three or four years' time if in the meantime we have allowed the economy and the public finances to get into a state in which repair is no longer possible and in which the only remedies could be the kind of draconian remedies which everyone in this House would want to avoid as far as possible. But to do that we need to have a fairly clear view of what the short-term strategy is.

I am very disappointed, although I cannot say I am very surprised, that we did not get any of that from the Minister this morning. He did not give any brief account that I could see of budgetary or taxation strategy. He did not even attempt to set out any element of strategy other than to refer again to one or two of the points which he set out as objectives in introducing the budget on 25 March. I am bound to say that even those bits of the budget speech that we might loosely describe as constituting strategy have on the whole been dropped from this Bill. They have been jettisoned in the period since 25 March as the Government gave in to one pressure after another, took the soft line, took the easy line of deciding to spend a few million more here, a few tens of millions more there, because to do anything else would require an unpopular decision or would simply require a decision which would have to be clearly motivated and clearly set in the context of an overall, even short-term, strategy for dealing with our problems.

That has not been happening and we see the results of it and the gaps that are in this Bill compared with what was set out in the budget speech on 25 March. I recall very clearly that the Minister set out in that budget speech a number of overall objectives for his budgetary policy, including a number of financial targets, and I also recall very clearly hearing the Minister say on that occasion that the budget allocations and the Estimates, taken all together, represented for this year the sum total of what would be spent by the Government on the various current and capital services concerned. He appeared to make it very clear that neither he nor the Government as a whole would accept any outstripping of those limits during the course of the year. Whether those limits were realistic is beside the point for the moment, but it is very clear that we could not even take those words at their face value. On every occasion when a problem arose, where there was a major protest or where the effects of decisions looked as if they might be unpalatable to one group or another the answer was not to re-look at the pattern of spending, not to have a further examination of the balance between different areas of spending. No, the answer was simply to say they would find another £45 million, £3 million or whatever the figure involved, that they would solve the problem that way.

The result of this is set out in the Minister's speech this morning so clearly that anyone with half an eye will see what he is driving at. He spoke about a major review of departmental expenditure. I am not sure what the result of this review will be but he spoke of it in the context of the need to find £45 million to pay for one, and only one, of the cave-ins which happened since this Government took office. When discussing the departmental review he said it was hoped it would provide substantial savings but if there was still a shortfall on the £45 million then he would consider taxation options. In that statement he has at one stroke destroyed the credibility, if there was much there in the beginning, of what he said on 25 March when he tried to make us believe that the targets set out in the budget would have to be adhered to. It is clear now that he has not got a great deal of hope that any review of departmental expenditure will provide the leeway he needs to deal with one, and I repeat only one, of the measures that have been taken since the budget was introduced.

If he does not make this £45 million out of this review, he says he will consider taxation options. This is not the first time we have asked what were these options. That question was asked on a number of occasions over a few weeks and so far we have not had any answers. I should have thought — and I am not alone in this because the general body of opinion on this side of the House and a substantial body of opinion on the other side agree with me — that if taxation options were being considered it should be fairly clear on 9 June, almost half-way through the year, that we would have seen some reflection of them in the Finance Bill, that we would have seen some effort to define how we were to meet the targets set out in the budget, we should have seen some indication of the kind of action the Government propose to make to meet their targets. We would have expected to see some indication of what the Government are planning to do. But we do not see anything of the kind. We see some elements being dropped from the Finance Bill compared with what were set out in the budget. When will we see these taxation options? It is blindingly clear to anyone who examines the situation and looks at what has been happening to public expenditure and revenue even since the budget was brought in that we are not going to be able to meet the targets set out.

The question of when we will see these taxation options and the kind of options they are is very pertinent not only for the Members of this House but for every taxpayer. It will be even more pertinent for the people who are the most easily taxed and we all know who they are — the people who pay PAYE and excise duties on the old reliables. They are the most rapidly changeable forms of taxation we have. If we are going to see taxation options, the question of when we are going to see them will be very important. If we were to see them today in this Finance Bill there would be some chance that if they were new taxation options they would be able to have effect over the second half of the year, but if we do not see them now but must wait until the autumn their nature will change very substantially and very perceptibly for the people who will be called upon to provide the extra revenue for the State. At that stage we will be running out of time for collecting new taxes and the longer such taxation options are delayed the heavier they must inevitably be if they are to produce a given amount of revenue to get the Government out of the hole they are rapidly digging for themselves because of their lack of policies which has been so apparent since they came into office.

The Minister spoke about the budget targets. From reading his speech I believe what he was doing was preparing us for the revelation which, in my view, is inevitable, at some stage fairly soon and certainly before the end of the year, that the budget targets are unattainable given present Government policies. There was a lengthy passage about this with a number of ingenious arguments. He said:

...the quarterly figures this year do not give an accurate reflection of the trend in the current deficit. The pattern of the deficit this year is unusual in that the budget was delayed and interest payments were higher than normal in the first quarter, while a significant proportion of the additional revenue raised in the budget will not accrue until the final quarter.

We all know that. It is a reflection which is relevant not only to the revenue activities we already know about and which are contained in this Bill but it is relevant to other revenue-raising activities which the Minister seems to be half promising us whenever the Government get around to screwing up their courage and showing us they meant what they said on 25 March. We have here a couple of sentences which deal with the evolution of the deficit over the period. The Minister said that by the end of June the deficit should be of the order of 100 per cent of the figure for a year as a whole and that this figure should be significantly exceeded by end September. He went on to say that revenue in the last quarter would greatly exceed expenditure and we would then make sure that budget targets for the year as a whole would be achieved.

In some situations, some kind of expectation might be possible, but it is my contention that starting off with a budget on 25 March, the targets of which are not on even in terms of the budget's own strategy, we cannot possibly expect, at the end of the year, that this evolution of which the Minister spoke this morning will pull the fat from the fire and leave us with any hope of achieving the budget deficit set out on 25 March. That budget deficit was not attainable on 25 March and is not attainable now on 9 June. It is doubly unattainable because of what has been going on ever since 25 March. Since then we have had a whole series of new ways of spending more money, without producing any new taxation options, as the Minister called them, or actually collecting any money to cover the additions to the deficit resulting from that series of payments.

A large proportion of Members of this House will not believe that at the end of the year we will have the budget deficit set out by the Tánaiste in his initial figures. Many other Members and I, as we go about our business in our constituencies, hear many people talking about budget deficits. Most of the time what they are really saying is "For goodness sake, stop going on about budget deficits. We do not know what those words mean and could not care less when you get down to talking about the politics of it. Tell us what you are doing for the country." When you talk about a budget deficit of the Minister's figure of £685 million, if I am not mistaken, you are talking about a situation in which the Government are spending almost £200 more per head of the population on the various services provided than they are taking in in revenue. Without going into a deeper analysis and breaking down these figures as between different uses and different ways of financing, it simply means that the Government who are spending all this money on behalf of our population are creating a situation in which a family of four are being caused, in a real way, to have a deficit of almost £800 a year — something which they would not dream of doing if left with a choice. If they did, they would have some reasonable plan for paying off such a debt and for ensuring that they would get something worthwhile out of it and would have planned repayments.

I am reluctant to interrupt the Deputy. I have, in practically every other case, reminded Deputies that, strictly speaking, we should refer to taxation proposals. We are not here concerned with Government expenditure as such. On the other hand, I have allowed the Deputy to treat of background and general financial philosophy. I would ask him now to come more directly to the taxation proposals which are in the Finance Bill, as I have with other speakers.

I appreciate the latitude which the Chair has allowed the Deputies, as indeed, we all do. I also appreciate the latitude allowed to the Minister for Finance. I am commenting on statements which he made.

I am sorry, the Deputy will see that any references which the Tánaiste made, to which the Deputy has referred, were rather passing references of a line or two. The rest of his speech refers to what is proposed in taxation.

I take the point. I do not propose to argue with the Chair.

The Chair does not differentiate between one and the other.

I would not for a moment suggest that the Chair does. I have been concerned to establish the point that the taxation proposals, in the form in which they are before us, are not such as to allow the Government to reach the target set as one of the objectives of the taxation measures themselves.

During the course of his statement this morning, the Minister said that we must have a much more exhaustive analysis of proposals for capital investment. It was curious that there was no reference in his statement to the famous investment programme of happy memory. It is referred to now and again, but was not referred to this morning. Does this mean that the Government now take the view that this investment programme to finance which the taxation levels of which we speak are necessary was an ill-judged, badly conceived programme, or perhaps one whose balance is now regretted by the Government because it is not producing the return which should be obtained for State funds invested in a number of activities? It is, above all, not producing the return which we should get in terms of employment opportunities for those now unfortunate enough to be on the dole. There does not seem to be any evidence from this Government's previous period in office, and even less from its present period in office, of any real commitment to a close examination of investment plans. This was the case in the recent past, as evidenced by the Knock airport affair, where it was made very clear that quite a number of Members and outsiders could have proposed a number of more fruitful ways of spending money in the West of Ireland, and a number of other ways of spending State funds in the western counties which would have been of much more immediate benefit to those counties and their people. They might have made a far bigger contribution to employment and wealth generation in that part of the country than the project now before us is ever likely to make.

The Minister spoke about the overall level of taxation, saying that it was difficult to compare levels of taxation as between one country and another. He said:

The general indications are that our overall tax revenue is set at a reasonable level.

I have no desire to parse in detail a statement like that. It may not have been written to be parsed in great detail. However, I assume that the Minister there meant that, in relative terms, the total burden of taxation on the individual in this country is comparable, in terms of the proportion of his income taken, with that in other European countries. From the few brief inquiries which I have been able to make in the meantime, that appears to be the case. That is probably what the Tánaiste was referring to. I make the point, made also by the Minister, that it is difficult to compare tax burdens as between one country and another. We are probably comparing a relative tax burden in this country, as he was doing this morning, with the tax burden in other European countries where, in fact, real income levels are higher than they are here, where there is a wider tax base than we have here. I think the Minister mentioned this morning that our tax base is rather narrow — thanks largely to a number of decisions taken by his own Government during their previous term of office. We are comparing that with a similar level of tax burdens in other countries which have a far lower rate of inflation than we have. All these seem to be relevant factors if we are talking about the burden of taxation and what it does to the individual's disposable income, to his real income and what he can do with the money he actually gets in his pay-packet or cheque. I think we have come pretty near saturation point in taxation. The Minister seemed in one way to share this view although he put it in a very conditional sense. He went on to say: "More fundamentally, however, there is now a wide imbalance between the levels of expenditure and revenue. Either expenditure is too high or taxation is too low". I do not think anybody would pretend today that taxation is too low; we must then conclude that expenditure is too high. The Minister himself said: "If the overall level of taxation in the broadest sense has virtually reached its maximum potential,"— which I consider it practically has —"then the only conclusion is that the level of Government expenditure is too high and must be reduced and policies must be directed to this end. There is no other option". Those were the Minister's words here this morning.

He went on to say that he disputes the notion that public expenditure is out of control. It seems to me that if we have got to the point where the Minister concludes that we have probably reached an excessive level of taxation and that there is no option but to reduce public expenditure then public expenditure cannot be regarded as being firmly under the Government's control. The antics we have seen since last March indicate to me that there is very little commitment to control in the kind of policies the Government have been following.

The terms in which the Minister spoke of his major reviews of departmental expenditure do not give rise in my mind to any real expectation that firm action will be taken to deal with this problem or that there is any firm commitment to examining in any fundamental way where we can begin to look for solutions to our problems. I find it slightly hopeful that the Minister has at least recognised the existence of this problem in what he said today. Over the weekend I had occasion to reflect on the relationship between the levels of taxation we have here and the levels of public expenditure that go with them, and on some of the destinations of public expenditure, and I ask the Government and the Minister to have the courage to look again and in some depth at the implication of what the Minister said today. If he really means what he says, that we now have no option but to look into the overall level of public expenditure, then the sooner we start doing that the better. Are there services that the State today provide for individuals which might perhaps be more effectively provided by the individuals themselves? Are there services the State provides which could more effectively be provided by some other agency, by private business, by co-operative ventures, by community services set up and run by the community?

We should look at these questions because unless we do we shall have no leeway for looking in any real sense with any prospect of success for any rationalisation of the tax burden under which we all suffer today, a burden which has now got to the point — I think there is general recognition of this — where our taxation system has become a disincentive to work and in some cases the combination of our taxation and social welfare systems has become an even greater disincentive to work and where in my view we are almost literally taxing people out of jobs. If the Minister really meant what he said I ask the Government to go more deeply into those questions because unless we do we shall not get out of the problem which the Minister almost defined this morning; it is a pity he did not go all the way and set out the problem in its true colours so that we could set about dealing with it.

As regards specific measures in the Bill I would first refer to sections 13 to 16 where we have a number of amendments concerning taxation of farm profits, a good old traditional bureaucratic phrase. The word "profit" is not one you often hear used in rural Ireland these days. I commend the Government on deciding to retain the measures in relation to the provision for two instalments for the payment of farmers' income tax, the provision in relation to stock relief and the provision regarding rates which we had already provided for in our budget proposals of 2 January. I am glad those measures have survived in what the Government have put forward and I hope that that view of farm incomes is one that will continue to be reflected in the approach to income taxation as long as we have the very serious income problem that now persists in agriculture.

I refer also to section 17 and the resource tax. In fact what is contained in this section is a provision that a resource tax will be refunded. The resource tax system has already been abolished. Both the abolition of resource tax and the refunding of amounts already paid were measures we had provided for in our January budget and I am glad these measures are retained in this Bill.

Section 27 provides for bringing forward the date of payment of corporation profits tax. This measure together with the provision for the imposition of VAT at the point of entry of goods into the country constitutes and will impose a very serious burden on manufacturing industry of all kinds. It creates a new burden for every industry that in the course of its production uses imported products. It is a very serious step and the combination of that and the earlier date of payment for corporation profits tax will create very serious liquidity problems for a number of firms.

I should like to read a statement made by the present Minister for Education on 16 February last. He said that in their recent statement the Director General of the CII asked for clarification of Fianna Fáil proposals to raise VAT on imports where applicable at the point of entry as they would relate to manufacturing industry. He went on to say that the main purpose of these proposals is to tighten up on importers who evade this tax and to reduce discrimination against home-produced goods thus helping our balance of payments. He said it was not intended that the proposal should harm the export sector in any way and that it was envisaged that Irish firms importing materials for further processing and re-export would be able to avail of a procedure similar to the inward processing concession. He said it was the intention also to introduce a scheme which would provide working capital to industry at the lower interest rates which at present apply to capital investment.

The Minister concluded by saying that the overall objective of the Fianna Fáil proposal would be to reduce rather than increase the cost of financing the working capital needs of industry.

How did that turn out in practice? The result was very different as many Members of this House can illustrate by way of reference to the situation of a number of firms, some of whom are importing goods to be used in the manufacturing of products for re-export and some of whom are importing goods to be used in manufacturing products for the home market. The problem remains the same but if anything there is a more flagrant imposition on firms who import goods to be used in the manufacturing of products that are to be re-exported. There is one firm who have made representations to me and to the Minister and who reckon that on foot of the VAT changes alone, their borrowing requirements to finance the earlier payment on VAT will be increased this year by at least £300,000 and possibly by up to £500,000. That means that in order to pay their tax bills as a result of this proposal in the Finance Bill, that firm will have to find that sort of money and will have to carry the cost of providing it without getting any return for it. This is a cost that will have to be incurred without any contribution being made towards maintaining employment in the firm, let alone increasing employment. I have written to the Minister for Finance in regard to this firm but so far he has not replied. The firm import most of their raw material from abroad and they export 80 per cent of their products. Having discussed the matter with people in that firm, who in turn have discussed it with the Revenue Commissioners, it appears that it is not possible for them to find a way of using the inward-processing arrangement that the Minister for Education referred to on 16 February. Even if the firm were to try to equip themselves so as to be able to take advantage of those arrangements they would have to incur extra capital costs. I do not see the logic in our present situation, with unemployment continuing to rise, of putting firms into the position of having to borrow extra money in order to meet their tax bills and in which, if they were to try to avoid the worst effects of what the Government are proposing, they would have to involve themselves in further capital investment just to equip themselves to use what appears to be the only way for a firm re-exporting a large proportion of their imported products. I do not see any logic in that sort of situation and neither do the firm in question see any logic in it. There may be many workers in this firm who will be made redundant at some stage during this year because of the company not being able to meet this extra financial cost while maintaining their present level of operation. The Minister for Social Welfare will not see the logic of the situation when he finds so many more people seeking social welfare benefits as a result of being thrown out of work because of this proposal and it may be that many people will lose their jobs because of what is being proposed.

To introduce such a measure at a time of such serious difficulty constitutes either total irresponsibility on the part of the Government or total desperation on their part to the extent that they are unable to make any of the other choices that they should make about the use of public funds while they must inevitably find increasing funds to finance the sort of situations that this kind of proposal may result in.

As I said here on other occasions, the budget of March 25, apart from anything that has happened since in the way of extra concessions that may now have to be covered by taxation options as was indicated by the Minister this morning, raised £56 million more in indirect taxation than will be raised by all of our proposals up to 27 January. This is being done in a way which in one respect at least will be downright inimical to employment and which cannot but have the effect of creating even greater difficulty for the maintenance of existing jobs.

Section 28 gives effect to the tax provisions involved in the special rescue package for farmers which the Government have implemented since 1 April and which I negotiated with the Associated Banks and the ACC during our period in office. It is stated that this section makes provision for the taxation arrangements that are required in relation to banks vis-á-vis that scheme but while the Bill may contain that provision I doubt very much whether any adequate provision is made to ensure that the scheme will have the effect it was intended to have. Specifically we had set aside in our budget proposals a sum of £4 million to cover the direct cash cost of operating that scheme this year.

The Government's provision for the scheme is £1,500,000. That is not designed to cover the cost of the tax concession to the banks. Perhaps I should use the word "arrangement" because it is an arrangement, a means of channelling a reduction in interest rates to the farmers concerned. It is abundantly clear that the figure being set aside will not be sufficient to finance that scheme this year. On a number of occasions during the budget debate as well as in other places I have asked the Minister for Agriculture and the Minister for Finance how they justify the reduction in the provision for financing that scheme. Neither of them has given any answer on that point. Neither of them has said anything about any other provision being made to ensure that the scheme can operate. No one has said why that reduction of £2½ million was made or how it is proposed to ensure that the scheme will operate this year on that reduced provision.

I hope the Government find out later in the year in this case, as in many other areas, that the provision they made for the scheme in the budget is totally inadequate and will give the lie to what the Minister for Finance said on 29 March about sticking to the targets he set out. I hope the Minister will give an answer to that and tell the House how he thinks he will get away with financing that scheme with £1½ million. I challenge the Minister to say, if that £1½ million is inadequate, as I know it to be, how he will make sufficient provision to cover the scheme. There are enough problems in the operation of that scheme and enough difficulties in trying to ensure that assistance goes to the people for whom the benefit of the scheme was intended without creating extra difficulties by not granting sufficient finance for the scheme. The Minister, when Opposition spokesman on Agriculture, was in a great hurry to make sure that the scheme got off the ground. I told him then that it was my intention to ensure that we did not rush into a scheme that was badly thought out and that we would make sure we got it right. We did get it right and it is generally recognised that the scheme will meet the objectives we set out. However, it will not be helped by a scandalous under-provision of funds.

Section 37 provides for the exemption of capital gains on the sale of some small sites. That provision was included in our proposals in January. Our intention was to ensure that the new provisions on capital gains tax did not constitute a burden on the many farmers who unfortunately find themselves in the position of having only one answer to the financial difficulties they face—to sell, if they can, one or two sites on their land for the building of houses. It is deplorable that they should find themselves in that position but since they are, our view was that they should not be taxed on any gain they would be fortunate to make out of the sale of sites. I am glad that provision has been carried into the Bill.

I should like to deal a little more in depth with the specific provision in regard to this in the Bill. The figure of £15,000 should be examined in the light of average site values throughout the country and in regard to the size of the financial problem being encountered by many farmers. I am sure many Members are aware that it is possible to find small farmers with debts amounting to £50,000 or £60,000, not to mention the type of debts to be found on medium and large farms. I should like to see that figure looked at in the light of considerations such as the average value of sites for building and the gravity of the income problems being encountered by farmers.

Section 75 provides for an increase in the flat rate reimbursement of VAT to farmers from 1.5 per cent to 1.8 per cent. That is designed to ensure that compensation is made to farmers for the increase in value-added tax on those farm inputs now subject to VAT. It is the proper way to go about this because value-added tax was not designed to fall on production. It is one which falls in the end on consumption, as we all know very dearly to our cost. This is another measure that was taken from our proposals of 27 January but the figure should be kept under review. Since the introduction of VAT there have been arguments from time to time that the level of the refund was not adequate to cover the amount of VAT being borne on farm income. It is essential that the figure be kept under review so as to ensure that the overall reimbursement of VAT into the farming sector keeps pace with the total amount of VAT going out. This is important in regard to farmers who are not registered for VAT.

Section 85 is another provision that is carried over from our proposals of January. It exempts the transfer of land to young farmers from stamp duty for a two-year period, a measure which is generally appreciated by all sides. It was designed to encourage the earlier transfer of land to younger farmers and people who have a greater and more direct interest in getting maximum production from the farm. I am not saying that the person from whom the land is being transferred was not interested in good farming but many of them have reached the stage where they deserve a rest after a lifetime of work in agriculture. The measure is designed to make land more mobile. We made the proposal to exempt such transfer from stamp duty for two years to see the effect a defined opening in the tax system would have on stimulating the mobility of land. I have great hopes that the measure will effect a new surge of mobility of land during that period. If it does we will have achieved something worthwhile in modernising the structure of our agriculture and in ensuring that we have a greater degree of utilisation of capacity in regard to our agricultural resouces.

I note the that Bill maintains our proposal to increase the relief for agricultural property for the purpose of calculation of capital acquisitions tax to £200,000 or half of the market value of the property, whichever is the lesser. The measure was designed to respond to the kind of difficulties that exist in the farming sector and to the need to ensure that the capital we have tied up in agriculture is used to the best advantage. It was also designed to ensure that the maximum proportion of available capital in agriculture was ploughed back into development and the expansion of production.

Compared with the budget of 25 March a number of points have been omitted from this Bill and the Minister glossed over this matter this morning. He galloped fairly quickly through it and he ventured only the remark that the cost of the omissions would not amount to more than £2.5 million. I am rather sceptical about this. He did not go into any great detail or identify the makeup of this £2.5 million. Even if he had done so and we could take that figure at its face value, I would go along with Deputy Bruton who said that to look at the effect of it this year is not going anything like far enough. What will be the effect of it next year or the year after that? That is a question which we could well ask about the whole body and shape of this Finance Bill. What will be the effect in 1983 even if we were to make a completely unwarranted assumption that we will arrive at the targets which the Minister set out in his budget proposals? Even if we were to reach at the end of the year the targets which the Minister set out in his budget proposals — which I do not believe is possible — what situation would we find facing us at the beginning of next year with the effects of the budget proposals of 25 March and the series of cave-ins we have had since then, with the effects of this Finance Bill and particularly with the pernicious effects that the early payments of corporation profits tax and the imposition of VAT at point of entry will have on employment?

Let the House mark my words: they will have an effect on employment right across the board, not just in the firms immediately involved but in all the other firms involved with those front-line firms, if I may so call them. It will be passed on in their costs. It will be passed on in the cost of what whose firms sell to other people, to farmers, to other businesses and to consumers. What situation will face us in 1983? When we find — as we will and I take no pleasure in it — that the financial targets set out are not reached we will face a very difficult situation at the beginning of 1983 when we come to draw up the 1983 budget. We will find that difficult situation whether or not the Minister gets around to some of these famous taxation options that he is talking about to cover the £45 million he mentions, which is only a small part of the extra problem that has been created over the last couple of months.

Very difficult choices will have to be made and we will face them under a Government who have shown again since 25 March as they showed during 1980 and in the first half of 1981 that their principal first reaction to any problem is to run away from it as fast as ever they can. They may be able to identify the trouble as was done at the beginning of 1980 and as the Minister nearly managed to do this morning but, having identified it, they run away from it. It is very critical that we do not run away from those problems now. Unemployment is still rising, our agricultural industry is suffering from three years of decline in income, and great pressure is on every single industry, on manufacturing industry whether it is selling on the home market or particularly if exporting.

We face the problem that the Minister himself hit at glancingly during the course of his speech. The burden of taxation is making it extremely difficult to employ people in any sector. I am not talking about just the situation of the employer running a small busines and employing ten or 15 people. I am talking about larger firms, about agriculture, agri-business and service industries. What is to be our response to that? Our response for the sake of our productive sectors right across the board should be to look again very carefully at how the Government are spending taxpayers' money. It must not be to say every time a problem comes up that we will spend another £45 million but to say, if we need to spend another £45 million to solve that problem, that there must be something else which has a lower priority, and we should look at that and re-balance our public spending.

I am convinced that a great many people all around this country would take the same view and if they believed that the object of Government policy was to find fair and more efficient ways of spending taxpayers' money they would have some assurance that the sacrifices that they make in handing over taxation from their pay packets, in the price of their petrol and in the price of the goods they buy, was to some avail and that reasonable use was being made of that taxation they they were obliged to hand up. If we do not get to that point we will have increasing discontent, increasing unreadiness to shoulder the burden and increasing resistance to taking the kind of measures that we need to take if we are to do what Governments should do for the people of any country, and that is to direct their affairs wisely and fairly in a way that will command the respect if not always the agreement of the people who pay the piper at the end of the day.

The introduction of this Finance Bill indicates clearly our Government's determination and will to achieve a proper balance between reduced borowing needs and improvement in employment. The commitment by our Government to achieve a fairer system of taxation should meet with approval by all, not only in this House but in every household in this country. The setting up of the Commission on Taxation, which is representative of the many different interests within our community, is a major step forward and we all look forward to the first report of that commission which I understand will be published very shortly.

This Bill contains many new and interesting features. In particular I would like to refer to a few very welcome features in relation to progress in the fields of health, the environment and agriculture. I will begin in this, my first contribution in this House, by complimenting the Minister on his increased allocation, which will come as a direct result of the adoption of this Finance Bill, towards the many areas and departments which are greatly in need of being salvaged.

I would like to refer in particular to the area of health. As a member of a health board I am fully aware of the capital input from Government in the field of health and I am conscious of the problems of health boards in budgeting for capital spending and community care. I am also aware of the difficulties that arise towards the end of the year, and sometimes only halfway through the year, when health boards find that there is a shortfall and they are faced with major decisions. They usually find that the only area they can trim is community care. Schemes which suffer most are those for home helps, transport for the needy, the old, the sick and the under-privileged. People living in remote areas find that services are suddenly halted. These are the people who cannot speak for themselves.

This problem became very acute following the cuts announced last year by the Coalition Government. We were told that these cuts were in the interests of the economy but we must be very careful in our deliberations of this Bill not to take any steps or advocate any measures to deprive people of essential facilities. The cuts last year in capitation grants from £8 to £1.80 had a disastrous effect. These cuts resulted in hospitals such as Saint Mary's in Mullingar and the Sacred Heart Home in Ballinderry refusing to take patients from our area, leaving no outlets for patients who wanted to move to convalescent homes. The hospital in Navan is overflowing and the admissions waiting list is growing every day.

Our geriatric hospital services are in a worse situation because cuts made in last year's budget would not allow the employment of more staff to look after patients. Forty women patients are awaiting admission to St. Joseph's Hospital in Trim. We provided a 20-bed ward some 12 months ago but owing to the embargo on staff recruitment imposed by the Coalition Government we were not allowed to employ the staff to run the ward. The beds are empty while people in north Meath cannot gain admission to St. Joseph's. I urge the Minister to do something about this matter as quickly as possible. He should lift this embargo and provide the service which is so badly needed.

The Government must adopt a new approach to the provision of facilities for the old and needy by building more welfare homes in isolated areas such as north Meath. Geriatric patients may be given great care and attention but when they have to move away from their own areas they suffer very much from loneliness. I urge the Government and the Minister for Health to examine the matter of community care and to involve local communities as much as possible in the care of the aged by providing welfare homes in isolated areas. Such homes are not as costly to run as hospitals because fewer drugs are used and fewer nursing staff are required. I urge the Minister to remove this embargo and to staff our hospitals fully, with special emphasis on St. Joseph's Hospital in Trim.

I thank the Minister for Finance for the injection of £900,000 to our board to salvage the community care service. It provided much needed capital for this most important service.

The capital cash injection into the environmental section is to be lauded. This will provide badly needed capital for industry and will provide much needed employment. The spin-off industries such as furniture and bedding which are experiencing great difficulties will get a boost. In the opinion of many people this country has done quite well regarding the provision of housing in the past 20 years but much remains to be done. I should like to thank the Minister for the Environment for allocating to our county council last week an additional £400,000. This will provide an extra 100 houses in County Meath, bringing the total number to over 200 for this year. The reintroduction of the provision regarding income tax relief on mortgages, the £1,000 grant for a new house and the help proposed for single people are worthwhile. It will end discrimination against single people and thanks are due to the Minister. Many single people had suffered because of the decision of the previous Government and the measure proposed by this Government will be most welcome.

Much needs to be done with regard to our road network and the provision of an extra capital allocation is most welcome. This is a Government of the plain people of Ireland. While we have undertaken to provide better communications throughout the country in the matter of highways, we must not neglect the county roads and lanes. I appeal to the Minister to provide money to preserve rural Ireland. We must widen country lanes and tar county roads and make them usable for the people in the areas concerned.

I live in an area close to County Cavan which is regarded as under-developed but I can assure Members that parts of Cavan are much more developed than many northern and western parts of County Meath. I ask the Government to make further approaches to our partners in the EEC to declare such areas as under-developed. In that way we could get the benefit of money from the Social Fund that is being poured into the west and the north west. The land is not much better and in some cases it is not as good as land in our neighbouring counties even though our grants are 20 per cent lower. This tends to have a detrimental effect on people who have worked hard to develop our county.

There are many small industries in my area and I welcome the approach of the Government in giving further incentives to such industries. They have been one of the most efficient and trouble-free sectors in the community and are very suitable for rural areas. There are many towns, villages and even parishes which have small industries employing from 10 to 30 people. They help considerably to preserve the rural community and they deserve our support and encouragement.

We have major problems with regard to water and sewerage facilities. I come from a county known as the rich county of Ireland. Yet, when I discuss with my friends here the progress made in the west, north west and in the south with regard to the provision of group water schemes I find that we have been left far behind in County Meath. While I must stress that we have one of the best county councils in the country, we must ask ourselves what is wrong. The truth is that to provide group schemes it is necessary to have proper regional water schemes and we are lacking this in County Meath.

In my own area there is a water scheme which caters for Oldcastle which must be 60 years old. In the town of Kells we are taking water from the river Blackwater which is prone to pollution and there are doubts about the amount of lead in the area. For years a scheme has been in the course of preparation for Kells and Oldcastle and that scheme is now with the Department and has been for some time. I would ask the Minister for the Environment to sanction that scheme as quickly as possible and let the water flow in north Meath and give the people an opportunity to provide group water schemes across that area. In the town of Kells which is only a few miles away from me probably one of the most scandalous developments that was ever allowed to take place in any county was the granting of permission by a Minister for Local Government over the heads of Meath County Council to build a large estate, which has left us with a problem that we may not solve in our time; there are no worthwhile sewerage facilities to take the effluent from this estate. I would ask the Government to implement the Kells sewerage scheme as quickly as possible. It is necessary that the east Meath water scheme be provided as soon as possible.

I have dwelt on a few areas perhaps at a distance from the Finance Bill that is in front of us but I am sure the Leas-Cheann Comhairle will forgive me for taking the opportunity when I was on my feet for the first time here to highlight some of the problems that face the people in the areas I represent. People are looking forward to the adoption of this Finance Bill so that Fianna Fáil, under our leader Deputy Charles Haughey, will undertake the works that I have mentioned.

There are many challenges for the Government. I particularly welcome the injection of finance that will be used in the fight against crime. This fight must not alone continue but escalate. I congratulate the Minister for Justice on the stand he has taken and I wish him well. I hope he weeds out the drug pushers and the racketeers. The people welcome the initiative that is being taken. But we as a Government should call on the good people of Ireland to support the Garda in their efforts to stamp out crime and racketeering. It is great to see the gardaí on the beat in such numbers as one walks through the city of Dublin and other towns.

There are other challenges facing our people which are too numerous to mention. But let me mention one before returning to the Finance Bill. We must not let our people be overpowered by outside influences. I know we must advance and develop. But we must retain our national culture and ideas. I compare our country today with what it was when I was a child, when we had a happy family home, very little money in our pockets, plenty of hard work, not too many of the niceties of life. Yet we had a happiness then that is not so evident today. In our homes we see canned entertainment, the depiction of violence, murder and drugs. The spillover of what we are seeing in our own homes is evidenced on the streets of Ireland today. I would urge the Minister involved to replace a lot of these programmes with good national programmes, more Irish dancing and Irish music. We should promote our culture. It is a national disgrace that over a number of years hotels across this country have been provided with Bord Fáilte assistance and grants and do little if anything to promote Irish dancing and Irish culture. I would like to take this opportunity to voice disgust that that is allowed to happen.

I heartily welcome the 5 per cent increase in long-term social welfare benefits in addition to all the little things that mean so much to people, for example, the television licence, free travel, free fuel, all introduced by Fianna Fáil and all going to people who, in many cases, had no opportunity to ask for them.

There is a boost to young farmers. Stamp duty on gifts of land to young trained farmers is being removed for a two-year period and to avail of this concession which will apply from the date of enactment of the Finance Bill a farmer must be under 35 years of age when the deed of transfer is executed and be in possession of an appropriate training qualification. It is hoped that this concession will go some way towards ensuring that land will pass more quickly into the hands of those who are best equipped to work it with maximum efficiency. This is a good thing because for too many years land was not being utilised, cultivated or stocked properly. The day has gone when the calf born the same day as the younger son was still on the farm when the son made his confirmation.

We have entered a new era in farm development. Everybody knows farmers have gone through a lean time and any help we can give them is worthwhile. I was delighted when the Minister first announced that VAT would be imposed on imports at point of entry and I have not changed my mind since. I realise we do not produce all the raw materials we need, but we should ask ourselves if the food we eat and the other commodities we buy are made in Ireland. There are firms who import raw materials to produce foods here which they re-export, and I am sure the Minister will look at this section and give help where it is needed.

I congratulate the Minister and wish him well. I know he will deliver the goods.

The Chair congratulates the Deputy on his maiden speech.

May I endorse your compliments to Deputy Lynch on his maiden speech? His politics were admirably sound, but I am not so sure about his economics. I agree with the thrust of his social views but on specifics we might disagree as to the amount of Irish dancing that should be shown on television or in our hotels. He made an eloquent case for the difficulties his constituents are experiencing in many facets of their lives and sought the Minister's help, and the help of the Government, to alleviate those difficulties.

What Deputy Lynch and most people on that side of the House avoid doing is giving consideration to why these difficulties are with us and to such a degree. Many of our present difficulties have not arisen by accident but are the unfortunate result of deliberate Government policy, commencing with that first great package of promises and strokes which is now being so roundly condemned by people who were in Government and were actively involved in delivering that package—the 1977 manifesto. It set the country's economy on a course of derailment and was prevented from an actual crash in July last year by a harsh but unavoidable and absolutely necessary supplementary budget.

If that budget had not been introduced the economic consequences for this country towards the end of that year do not bear thinking about. Devaluation would have been unavoidable and that, in turn, would have brought with it, not immediately but inevitably and quickly, immense problems of unemployment and economic stagnation. If those corrective measures had not been taken last July and these horrific economic consequences were allowed to happen—and they were inevitable—they would have had severely dangerous social repercussions in the sense that there would have been very nearly a collapse of certain services to which the country has become accustomed and which it needs in order to function efficiently as a modern democratic economy. These services would have ground to a halt. It is unthinkable that something like that would have happened but there would not have been enough money in the kitty in the last quarter of last year to pay the Garda and the Army. That is the type of serious problem that confronted the Government when the supplementary budget was introduced last year. Things had deteriorated to that appalling extent that we were going to have on our doorstep that kind of ludicrous scenario we read about in emerging badly managed Third World countries.

That position was avoided because corrective measures were taken. They involved fairly harsh doses of taxation but there was a general acceptance of the need for them. To obtain that acceptance and the willingness of the public to accept those harsh measures, it was necessary to spell out why they had come about and what the consequences would have been. Having regard to the diet of promises and strokes, the avoidance of facing up to reality, the brushing aside of problems that had marked the conduct of public affairs not just for months but for years before that, there was a remarkable maturity and willingness on the part of the people to accept the need for this sudden change and the harshness of those measures.

Every responsible economic commentator recognised that things were at a serious pass, that urgent remedies were needed and agreed that for those remedies to be effective there had to be a drastic change in national thinking. There had to be new attitudes towards Government spending, finances and expectations generally. These new attitudes could be procured only by the unvarnished telling of the harsh truth. If that was gloom and doom, it had to be spelt out. Avoiding the harshness of reality will not make the problems go away. For too long part of our approach in Government has been to hope problems will go away if we refuse to mention them, or recognise their existence.

The supplementary budget of last year was necessarily only an interim measure. The corrective measures which it introduced should have been continued in this year's budget. In the proposed budget of 26 January that policy of correction was being continued in the way necessary. Unfortunately, that budget failed and a further budget was introduced on 25 March which made significant changes in the tone of the earlier proposals —changes which had the objective of masking the hard realities facing our economy and, once again, giving the impression that things were not as bad as the gloom and doom merchants had been preaching, that there was room for a few more promises. That was the tone of the second budget. It took over and continued many of the features of the budget which fell. Indeed, Deputy Lynch has paid tribute to some of those features.

The Minister this morning did not give a comprehensive economic statement. which is understandable. He did, however, say that the Government's principal concern was to achieve a proper balance between reducing our borrowing needs and improving employment. In that statement he concurs with the views of the Central Bank as contained in their annual report published last month. The Central Bank set out the primary and immediate objectives of present economic policy to be to correct the imbalance in public sector finances and to see a rapid re-orientation of public capital expenditure towards the most productive purposes possible and, allied with that, to improve the competitiveness of Irish industry and services. There is agreement between the Minister and the economists in the Central Bank as to what the objectives should be. This budget is the instrument whereby we go towards meeting those objectives. The general tone brought by the budget to our financial regime enables us to judge how serious the Government are about attaining those objectives.

First of all, let us consider the objective of bringing our public sector finances into balance. The Minister states that at the end of March the deficit was 58 per cent of the projection for the year as a whole, which was in line with expectations, that by the end of June the deficit would be of the order of 100 per cent of the figure as a whole and that this figure should be significantly exceeded by the end of September. The Minister, however, is optimistic. He reckons that this year, because of the late budget and the new taxation proposed on imports, there should be a flush of money particularly in the last quarter of the year, which will rectify the position and that we will end up on target as defined in the budget. I must question yet more of the vague projections, these nice optimistic hopes of the future which have categorised so much of the Fianna Fáil approach to public finance over the last few years, all the time looking for some vague expectation, with a conman's optimism that something will turn up to avoid the evil day.

The Minister is laying great store, particularly, on the income which the new VAT on imports will produce. There must be a number of question-marks as to whether or not his optimism is justified, firstly as to whether the level of imports will continue at the same rate and in the same volume. This is a two-way weapon. If they do, our balance of payments problem will not significantly improve, unless of course our exports perform better. On the other hand, if they do not come in, then the VAT returns will not be made. I think imports will be depressed, mainly because of a tendency on the part of importing firms to minimise orders to the greatest degree possible so as to lessen this new burden of value-added tax which they will have to pay at point of import.

We are told that there is a considerable liquidity crisis in Irish business. If one believes what one hears while going about the country, that is so. Every person in business is finding it difficult to collect the money owed to him or her, which must inevitably lead to a cash shortage, a liquidity crisis. Firms in that position will keep as low as possible the demands on their cash resources. Their cash flow will be down and, if they see this huge, new and unexpected liability for VAT at point of import, they will try to minimise that liability to the greatest degree possible, particularly when they know that they must either pay for it out of scarce cash flow, or else borrow at more than 20 per cent the cash needed to fund these imports. Obviously, there will be great pressures on importers to keep their volume of imports as low as possible. This, in turn, will dampen the buoyancy in the expected revenue from this new source. If that happens—and I think having regard to what I said it is a reasonable scenario and something likely to happen—the Minister's optimism that there will be a flush of money in the last quarter-year from this new tax will be shown to have been misplaced and a serious error of judgment will be made in so far as the balance that we want to move towards as between income and expenditure will get even farther away, with all the adverse economic and political consequences that must bring.

The other difficulty facing the Minister, and which leads me to be sceptical about whether he and his party and Government have learned anything from the economic situation in past months, is the way in which he proposes to deal with the £45 million cost of the changes in the PRSI which he introduced earlier in the year. That concession will cost £45 million and the Minister says this has to be made good and he hints that it may be got as a result of a major review of departmental expenditure which has been recently completed and the results of which are being evaluated in his Department. I do not know if the review involves having a look at the services provided for in this year's Estimates, services that the country needs in order to continue functioning, or whether it is an examination of the operation of Government Departments with a view to effecting economies in the normal meaning of that word so far as our personal budgets are concerned. The Minister is a bit short on information there. If it is his hope to effect economies in operation so as to save £45 million I genuinely wish him every success, because there is room for more economical operation of the public service in a myriad of small ways.

For example, I asked a series of questions of every Government Department on what was the cost of photocopying in each Department, and the aggregate of all the answers comes to almost £1 million. That was my experience and it is a small thing but it is indicative of what could be done. In my experience if one asked for a copy one never got one, but two or three. In what other areas of operation in the public service is there room for simple small savings in the way the system operates? It may seem nit-picking to take something apparently as trivial as photocopying, but when the cost is £1 million and the Minister is trying to save £45 million and is looking in a difficult area, he must look at everything. If there are other ways for economising —and there may well be—I would guess that it would be some time before they could be implemented and result in an appreciable financial gain to the Exchequer. The Minister might get some gain this year but it will still leave him a long way short of £45 million. On the other hand if he is looking at departmental expenditure in the sense of looking at the provision for the services being provided by various Departments I would regard that with some foreboding. I can assure the Minister—and he must know—that the Estimates were examined in the greatest detail with a view to cutting down the Government's liability as much as possible. This was a long and tedious process undertaken by the previous Government and the final Estimates were, we felt, the very minimum that had to be provided without on one hand causing disemployment or on the other curtailing or ending services the country needs to continue functioning efficiently.

There is a limit to what one can cut off Government spending on State services, because if that limit is reached there can be serious unemployment. One could argue that some unemployment resulting from non-essential services might have to be tolerated in the name of efficiency, but that is taking up a very arguable stance. If one in cutting Estimates goes beyond the limit unemployment can result, and also if one goes beyond that limit services which are essential or which are perceived by the public to be essential may have to be curtailed to an unacceptable extent. I am very sceptical about the Minister being able to get any part of this £45 million from cutting back on the Estimates for services.

He says that if there is still a shortfall on the £45 million he will consider taxation options. The Minister knows as well as I do that without any shadow of doubt there will be a serious shortfall in his efforts to try to obtain the £45 million. If he sticks to his opinion as in his speech he will have to consider taxation options, but if he runs true to the form of his party he will avoid the harsh taxation option and we will find the deficit expanded and borrowing increased.

The Minister in order to assume a veneer of financial responsibility says that if there is still a shortfall he will consider taxation options. If the Minister were serious about implementing taxation to meet the shortfall this is the Bill in which he should do it. I do not think he is serious. I think it will be the old Fianna Fáil game of avoiding the hard option, of taking the easy way out, letting the deficit expand and borrowing an extra few million pounds. If I were a betting man I would have a fairly substantial bet that that is what will happen, because the Minister's shortfall problems do not end with the £45 million here. Apart from the fact that his whole deficit looks like going completely out of kilter for the reasons I indicated earlier he is also faced, as he says himself, with £2.5 million this year to meet the changes which he is making for the benefit of some taxpayers in the announcements he made in March when he introduced his budget. For that he will have to find £2,500,000 but he has not indicated where that will come from. The old magic reliable of revenue buoyancy is already accounted for in the budget figures. It will be very interesting to see if that buoyancy is achieved. In any case, the Minister cannot look to that source either for this amount or for the £45 million in respect of PRSI. But, of course, there is one further figure which the Minister must try to find also arising out of his budget and which we thought might have been provided for in the Finance Bill, that is, something to take account of the concessions made to the building societies in terms of tax foregone to enable them to maintain their interest levels. I do not know how much that amount is but perhaps the Minister will let us have the information when he is replying. I have a vague recollection that it is in the region of £8 million to £10 million.

The Minister does not even go so far in regard to that amount as to say that he will consider taxation. He does not even attempt to spoof us when including that in his targets of saving on capital or Government expenditure. I am very suspicious that the Finance Bill for this year is something of a con job. It is not implementing the budget as it was introduced to us and it makes no provision for the changes that have occurred in the meantime.

I am apprehensive about the eventual outturn in the nation's finances at the end of this year. The first reason for this apprehension is that the deficit will be fully realised while the year is only half through. The Minister's optimism for a flush of money in the last quarter of the year is misconceived and erroneous. It is a careless and invalid assumption, one that cannot be substantrated on any argument. To attempt to rely on it in a budget speech is very near fraudulence. It is reckless and would stand up to the terms of the criminal law definition of fraud. However, this would be entirely in keeping with the budgetary approach of the party opposite as exemplified in the budget they produced in 1981.

The Chair has been giving most speakers a mild reminder that the Finance Bill is somewhat different from the budget speech and has been encouraging them to stay with the question of taxation rather than to be returning to the past.

I appreciate that, but I am making the point that the Finance Bill does not implement this year's budget. It does not provide for the taxation to meet what was provided for in this year's budget. I am making the point also that in regard to the Minister's speech introducing this Finance Bill his expectations, his prognostications and his assumptions bear no relationship to reality. There is precedent for this and, as I have said, that precedent was in last year's financial mismanagement. That, too, is the point I am making in relation to this year's Finance Bill.

The other area concerns the need for prudent investment of capital expenditure towards the most productive purposes possible. That is what the Central Bank say and the Minister says it also in his speech. I quote:

Borrowing for capital purposes must be viewed in a different light. I am not advocating unrestricted borrowing for capital development as this would be entirely wrong. We must be selective but we must at the same time be prepared to borrow at a substantial level for sound investment projects which will strengthen our economy and provide a worthwhile return in due course. I want to emphasise the need for greater selectivity. There is a growing concern that much of our capital investment in the past has failed to produce an adequate return and we must be more cautious in future about the uses to which this borrowing is put. In short, there will have to be much more exhaustive analysis of proposals for capital investment.

These are impeccable sentiments, sentiments of financial rectitude that must command universal approval. We must totally agree that scarce and dear capital must be invested in such a way as to get the maximum return for it. But one can only be puzzled at this stage of this nation's development as to why it is necessary to re-assert in such strong terms what is in effect an economic truism. Nevertheless, it is re-asserted here and not for the first time has it appeared in Government speeches, in White Papers, Green Papers and other discussion documents.

I wonder if the Minister meant it or was it just a trite economic truism put into his speech. I have grave doubts that the Minister meant what he said and the reason for these doubts is that I do not believe any Minister could make such a statement in such unequivocal terms and remain a member of a Government who are prepared to continue with the development of Knock Airport — the Connaught Regional Airport. I invite the House to consider the acronym for the Connaught Regional Airport.

(Mayo West): The Deputy is running out of steam.

That is not the best phrase the Minister could have used.

Debate adjourned.
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