This debate is more or less a rehash of the budget debate. I did not contribute to the budget debate because I believe that until the Finance Bill is circulated we cannot see exactly where the chages will take place. One gets a better chance of dealing with the areas one is interested in on the Finance Bill. It is for that reason that I did not contribute on the budget debate.
The important event of the year so far as the administration of the Dáil is concerned is the budget. A budget should stimulate, consolidate and help to develop the economy. The Finance Bill which we are discussing at the moment is to give effect to the provisions of the budget. Coming from a constituency like Wexford I am worried about what the budget and the Finance Bill hold for that constituency and for the country as a whole, because I believe that the three men closest to the Taoiseach — the Ministers for Finance, Agriculture and Industry — are being influenced by him. This is worrying not alone to me but to most people who have a stake in the economy of this nation.
I want to speak specifically about the economic policy being pursued by the Government. We have heard a lot about the social policy. But if we have not got a good economic policy we cannot secure the moneys to provide for a social policy. Nobody denies that the Coalition Government in the short space of seven months were able to alert the country to the depths of recession and debt into which it had been plunged by the previous administration. So well did the Coalition Government of the time present their case to the country that when the general election was called the country was willing to accept the reality of the situation as outlined by the then Government.
The country was and still is ready to face hard economic policies. But in spite of the general acceptance of our economic difficulties, in spite of the willingness of the public to face the consequences of the situation into which Fianna Fáil plunged the country and in spite of an understanding that financial rectitude is a prerequisite to continued support from overseas bankers, the day of reckoning was once again postponed and for a considerable time. We got promises in the general election of 1981. We got promises in the February election of 1982, from the Taoiseach in particular, of stop-gap patching up operations— that is the only way I can describe it — wherever problems were clearly enough identified by Fianna Fáil at the time. The Taoiseach went around the country in advance of these general elections doing favours for people, giving an nod here and a nod there. Now Fianna Fáil are back in office on the strength of these financial gimmickries and mortgaging of millions to the future — all to obtain a couple of votes and one vote in particular, the vote of one Independent in a Dublin constituency.
What will be the final bill at the end of 1982? I am not prepared to accept the accounts as presented because they seem to change from day to day. Still, as the pressure groups arrive on the streets, the Government are prepared to yield when there is no need to do so. That was the policy prior to the 1981 General Election. No matter who cried wolf the Government stepped in and paid the bill with borrowed money. It is pointless to hope that the harsh world of reality will pass us by because we are unique, because we are Irish. The harsh world does not care whether we are Irish or American or Argentinian or French or German. If we borrow money on the world money markets we must repay it with interest. The previous speaker said that money was borrowed at 3 per cent. I would like to know when money was borrowed at 3 per cent.
One of the measures taken in the budget, and now in the Finance Bill, was in regard to paying VAT at the source of entry. The Minister for Finance said that he was making provision for the people needing this money to borrow from the ICC. But he did not tell us the interest rate. We now find that it is about 22 per cent. Those are the harsh realities of borrowing money. Those are the harsh realities of the meaures taken. Those are the harsh realities which face the industrial arm of our economy today.
Our ability to service and repay our debts depends on our ability to negotiate fresh productive lending for the country. In a speech to the Economic Club in New York some months ago the Taoiseach suggested that Coalition efforts to bring public finance under control had damaged Ireland's reputation in the United States. Yet in a recent survey it was found that approximately one quarter of our overseas industries located in Ireland would go elsewhere if they were to make another investment. This disenchantment springs from problems resulting from bad government over the four years from 1977 to 1981.
I have the height of praise for the work of the IDA down through the years. Everybody will admit that great economic strides have been made over the past ten years, but the present economic policies being pursued are seriously damaging that success. We talk about attracting industries, but we must create good conditions — low interest rates, low inflation rates, good labour relations, stable government, ease of communication and, above all, industrialists must be assured that they will be able to make a profit.
That brings us to the question of competitiveness. At the moment many industries are not competitive even on the home market. The previous speaker mentioned borrowing money and interest rates. I am not, and never have been, against borrowing for productive purposes. But I strongly oppose borrowing to meet day-to-day expenditure, and that is what is happening here. All the handouts over the past two to three years were on borrowed money. Every member state of the EEC is interested in its own problems and the concessions got by the Irish Government are very small. That does not affect the other member states and they are satisfied as long as the benefits flow in their direction. If we borrow we must repay with interest. If we do not repay we will reduce our own credibility on foreign markets.
I believe the provisions of this Bill are completely inadequate to stimulate growth in the economy and to encourage foreign and home investment. While we have an inflation rate of 22 per cent and interest rates at 20 to 22 per cent we cannot expect investment from the home market or from abroad. There has been a great deal of cricitism about the budget introduced by the Coalition Government in June 1981. That Government introduced a budget in January 1982 which resulted in a general election but the provisions in that budget were necessary and people do not deny that fact. This was borne out at the Dublin by-election. During that by-election I had my first chance to meet Dublin people—the very poor, middle-class and the very well off — and over those three weeks I learned just how these people are thinking. If they can see the light at the end of the tunnel they are prepared to take harsh measures and to make their fair contribution.
It has been widely stated that this Government are causing confusion and uncertainty by changing their minds from one week to another, and even from day to day. As our amendment says, there are serious changes in this Bill from what were proposed in the budget. Our economy will not improve until the inflation rate is reduced. Let us look at our neighbour, Britain. Her interest rate is around 12 per cent while ours is from 20 per cent to 22 per cent. How can we compete for new industries when we have such a high interest rate? That is the harsh reality.
I object to the payment of VAT at the point of entry. I accept there is a great deal of tax evasion but it is the function of the Department of Finance to tighten up their regulations. To have to pay this VAT at point of entry is a very damaging blow to industry, which must import large quantities of raw materials to create jobs and carry on business. Industrial development over the past ten years has made great strides but this imposition will put a tremendous strain on cash flows for industry. Irrespective of whether the people concerned have to borrow from the banks or the ICC, they will still have to pay the exorbitant interest rates of 22 per cent. No doubt the cash flow situation in all sectors of the economy is serious, but not more serious anywhere else than in the manufacturing industry. This imposition of 18 per cent will create further redundancies. Even in the last 24 hours we have seen industries closing and we are still not at the end of the road. The Government have imposed this measure to collect £140 million, but I believe that at the end of the year they will not have collected that amount. All that will have happened is that there will have been more redundancies and further closures. This is a very serious situation.
I wish to raise the question of income tax appeals procedure. A taxpayer not satisfied with an assessment or a determination of his tax-free allowance made by the inspector of taxes is entitled to appeal against that assessment or determination by giving in writing notice to the local inspector. The appeal commission hold hearings on a regular basis in each tax district. The decision as to which cases are listed for hearing rests solely with the inspector and, in the normal course of events, only a small proportion of the total cases under appeal will be heard at any particular sitting of the commission.
Normally, cases listed will have been under appeal for a considerable length of time, which usually suits both the revenue people and the taxpayer or his agent. However, a small number of cases under appeal need a speedy hearing to avoid financial hardship. If the Inspector decides not to list these cases, the taxpayer has no adequate means of redress other than making repeated requests to the inspector which may or may not be ignored. To eliminate this imbalance, the appeals provisions should be amended to ensure that a case will be listed for hearing at the next regular appeal hearing in the District Court following a formal written request by the taxpayer.
The inclusion of such a provision would also ensure that a submission to the inspector would be dealt with within a reasonable time. At present, it is not unusual for the Inspector of Taxes to take over 12 months to reply to submissions, although that does not happen in all cases. The taxpayer should have some rights and at the moment he has not. He can only go to his TD or local representative to try to bring pressure on the Minister concerned. This is most unsatisfactory, particularly in the present difficult cash flow situation. People must get their tax situation in order.
Another matter which I wish to bring to the notice of the Minister for Finance is the problem involving sub-contractors' certificates. This first came to my notice over two years ago. I have since taken up the matter privately with the Minister, with no result. The system of sub-contractors' certificates was originally intended to counter tax evasion by fly-by-nights. However, the regulations and the manner in which they are applied are so severe that they are financially damaging to honest and genuine sub-contractors. Particular hardship is caused where the contract includes a large percentage of material. In these cases, deductions of tax at 35 per cent and subsequent delays by the revenue people in dealing with repayments have caused crippling cash flow problems. The present restrictions should be relaxed. It should be sufficient for a sub-contractor to have an established place of business and a residence owned by him in order to qualify for a certificate, without the additional existing requirements. The provision regarding sub-contractors' certificates states that the sub-contractors who are not in possession of such certificate and who may have a large contract for a county council or a private firm will be charged 35 per cent of the money from that job.
In my own county, the Collector-General has been most reasonable, but there have been many problems and I see no reason for having to spend hours on the phone trying to get these problems solved. That is the function of the Department of Finance, who should ensure that these measures do not seriously damage sub-contractors financially. I accept that the fly-by-night must be dealt with, but am not prepared to accept that the local Inspector of Taxes cannot identify those people. It is important that he differentiate between the fly-by-night and the genuine sub-contractor. I make a very strong appeal that this issue be dealt with immediately. I must put on record that over the past two months in several cases of this nature the Collector-General acted very reasonably. Unfortunately one case broke down and the man had to make his entire staff redundant. This staff took action into their own hands, put a picket on the tax office concerned and then the certificate was issued. That type of action should not be necessary and the situation is very serious. In two other cases, the Collector-General himself had to step in to solve the problem just in time.
The problems of borrowing became apparent in the debate on the budget and will appear in the debate on the Finance Bill. It was interesting to hear the previous speaker saying that we could and did borrow at 3 per cent interest. I do not know what year he was talking about. I have the available figures in front of me. The interest paid on the national debt in 1976 amounted to £268 million. For 1977, it was £339 million, the capital repayments amounted to £315 million and the interest from outside the State was £99 million. The expected figures for 1982 are as follows: Interest payable on national debt, £1,300 million, capital repayments on the national debt, £1,116 million, interest paid outside the State — and this is very intersting — £528 million. Would anyone in his right senses think that this escalation from 1977 is not damaging to our economy? Of course it has done irreparable damage. We are continuing to borrow because we want to build an airport at Knock and want to keep open factories at Tuam and elsewhere. These are all parasites. The sooner the better for our people that the Government realise that the day has long passed when we could continue to borrow on this scale, and be committed to pay so much in any one year. Those are the harsh realities.
It is extraordinary that the Taoiseach has not changed his policies since he was in office 18 months prior to the 1981 general election. I feel sorry for the senior officials of the Department of Finance who must be asking what the Taoiseach will do next, where will he spend the next £25 million, where are they going to collect it. The PRSI protestors took to the streets and there was another £46 million between the budget and the enactment of the Finance Bill for which no provision was made. What will our current budget deficit be at the end of this year? We cannot trust the figures, because we cannot trust Government policies. These have created uncertainty and redundancies. These policies are creating an inflation rate of 22 per cent and an interest rate also of 22 per cent. This country cannot continue to develop under those conditions. We are in reverse at present in no uncertain manner. People are beginning to accept that as the harsh reality.
I now turn to an area in which I am very interested—that of the county councils. These councils provide essential infrastructural development, such as roads, water, sewerage and housing. In some cases, they play a very important development role in their county. Unfortunately, the present deterioration in finances, not for one county council but for all, has had serious repercussions on the local community. This rot started with the Fianna Fáil action in 1979 of restricting the county council incomes to 10 per cent. At the same time they knew perfectly well that the statutory demands on all councils for wages, health contributions and so on were in the region of 35 per cent. We are now in the position that the majority of county councils are on the verge of bankruptcy; their development role has ceased; the number of houses being built has decreased and there is deterioration in roads and a decline in installations of water and sewerage in practically every county.
In our own county council in 1979 in Wexford we had to our credit and invested approximately £1 million. It was reported by the county manager on Monday last that he was asking for approval from the council for current expenditure overdraft accommodation of £2 million. The most unfortunate part of it was that he was refused accommodation by the bank with which the county council have carried on business since 1922. We have to resort to the money lenders. When county councils must resort to money lenders for cash to run the county services it is a really pitiful situation. That is the only way I can describe it. We have to pay 22.25 per cent for that money. That is far away from what the previous speaker spoke of, three or five per cent. This will have a very serious effect on our council programme for the next financial year. It means a reduction in the development role of the council, a reduction in housing and in expenditure on roads, a reduction in the installation of water and sewerage facilities which are so necessary because they were neglected through the years.
I regard the housing situation as the most serious. In 1980 Wexford County Council built 117 houses; in 1981, 100 houses; in 1982, 85 houses and in 1983 it is projected that we will build 75 houses. This is as a result of the policies pursued by the Government not only in the past four months but over the period from 1979 to the present time. I accept that we were in office for seven months but we were taking the necessary remedial action to put the state finances right. Within three months the present Government — and it is in this Finance Bill — have put them in further jeopardy. This rubs off on the county councils. I believe it is the moral obligation of any State to house its people if we are not to have numerous social problems. The county councils are the housing authorities and they cannot house the people if they cannot get the money.
Getting back to the Gregory deal about which we hear so much, particularly from Dublin Fianna Fáil Deputies, Dublin is not all Ireland. I do not object to our capital city getting reasonable money for expenditure. We feel proud of our capital but we must look at the situation as to why that deal was done for Dublin. It was the buying of a vote; it was carrying on the policy which the the present Taoiseach has adopted since he became Taoiseach in December 1980 of doing deals of one kind or another but doing them at other people's expense — that is what is important. He is not spending his own money but the State's money. He has not the right to do that but we have the right here to state categorically and clearly for the people outside Dublin that the reason for the reduction in housing in Wexford is that all the money has to go to Dublin city. This situation is most unsatisfactory for the council. It will have long-lasting effects on the infrastructural development of every county and the Fianna Fáil Party and Government are totally responsible, particularly from 1979 to date.
I come to an area in which I am very interested and in which I operated as Minister of State in the previous Government — agriculture which is so important to our economy. For the past three years farm income has declined drastically and as a result agricultural production has fallen. It should be a national priority to maximise agricultural production. I say this not only in the interests of the farmers but of the entire community. Maximising agricultural production can have a dramatic effect on the employment situation. There is tremendous employment potential in agri-business. The enemy of agriculture has been and still is inflation. During the term of the Coalition Government of seven months, while we were debating the measures to be taken in the budget regarding agriculture the then Minister for Finance, Deputy Bruton, the Taoiseach and the Minister for Agriculture state that with the policies pursued by that Government inflation could be brought down to 12 or 13 per cent by the end of 1982. I have no doubt that this was possible had the January 1982 budget gone through the House. If that had happened the benefits to agriculture and the country generally would represent about 7 or 8 per cent of an improvement.
We hear a lot about the increase in agricultural prices in Europe. We got about 10 to 11 per cent but it is very little benefit to the farming community if inflation stays at 18 to 20 per cent. Judging by the policies being pursued by the Government, with inflation at 17 to 18 per cent for 1982, with interest rates likely to stay around 20 per cent, with the 10 per cent increase from the EEC — the only increased income farmers will get — I believe that at the end of the financial year there will be a further reduction in real terms in agricultural income of 4 to 5 per cent. That adds on to a decrease in income over the past three years of 50 per cent. Would any other sector of the economy accept such a situation, income continually dropping over a four-year period and seriously damaging a basic section of the economy, agriculture, which is the only real asset we have as regards income which does not involve continued importing to produce exports? Is any other sector of the economy prepared to accept the conditions which the farming community have to accept now?
I question also whether the Government realise fully the conditions prevailing in agriculture, and I am concerned seriously that the Taoiseach and the Minister for Finance may exert too much influence on the Minister for Agriculture. I shall be giving that Minister a chance before criticising him, but after a month or so we shall be very critical of him if he fails to take the necessary action to ensure that farmers' incomes are brought up to a realistic level. The first big task facing the Minister is the implemetation of the tax-based lending scheme, and that scheme, incidentally, was drawn up more or less by the Coalition Government. It is a very important scheme because it follows on two other schemes — the national interest subsidy scheme of 5 per cent and the development interest subsidy scheme of 5 per cent as well as on the European Investment Bank loan at a fixed interest rate of 14 per cent. While it was my responsibility while in office to put those schemes into operation I found that there was too much interference from the Department of Finance. I appreciate that that Department are only doing their job and that they have a difficult job to do especially with the Government now in office, but they must recognise clearly that these schemes are absolutely necessary if we are to make any attempt to pull agriculture out of its present state of recession.
Agriculture represents 50 per cent of the goods sector of this economy, and that has been the situation for the past 25 years. Despite the fact that we have put huge sums of money into industry we are having great difficulty in bringing about a situation in which agriculture represents less than 50 per cent of the goods sector. At the moment its potential is about 55 per cent but under present conditions development is at a standstill and will remain so while present conditions prevail.
I understand that the 5 per cent national interest subsidy scheme is doing quite well, as also is the development loan arangement, but the European Investment Bank loan operated through the ACC at 14 per cent fixed interest for 12 years is not doing as well as had been expected. This is because of the numerous restrictions attached to the loan. When the scheme was introduced I experienced tremendous difficulties with the Department of Finance in regard to having some of those restrictions removed, but when the scheme is being put into operation we find even more restrictions being imposed by the EEC. It is the job of the Department of Finance to ensure that if we are getting concessions from the EEC, these concessions are operated properly at home. The EEC should not be allowed to impose restrictions which to my mind should not be imposed. It is difficult enough to get concessions from the Community, but if there is an overloading of restrictions the concessions cannot be operated properly. On the 14 per cent loan is a 5 per cent interest subsidy also. I appeal to the Department of Finance to ensure that the scheme is operated with our 5 per cent for the first four years. I had great difficulty in trying to have that accepted but I am glad that it is being accepted now though I am still concerned about the tax-based lending scheme being put into operation.
Among the conditions govering that scheme is one which provides that all applications must be submitted through the appropriate lending agency and that that agency will have primary responsibility for assessing the eligibility of applicants for the scheme. It is provided that all participants must sign an agreement, authorising the lending agency to make all relevant documents and information available to the Department of Agriculture. I am not against that in any way but I am opposed to the next part of the regulation, which stipulates that the documentation and information must be made available also to the Comptroller and Auditor General for audit purposes. Surely a scheme of this kind is for the benefit of agriculture and why, then, ask the CAG particularly, who is in charge of the companies regulation legislation, legislation under which some accounts have not been submitted for four or five years, to audit what is a rescue package? This situation will damage the scheme to a great extent. I am not suggesting that the farmers should hide anything but I am saying that the CAG should not step in where there is a rescue package involved. If we were talking about a scheme that was lucrative it would be appropriate to bring in the CAG, but that is not the case. The Department of Agriculture will have available to them all the necessary documentation, and that should be sufficient.
I must call on the Minister for Agriculture and on his Minister of State to ensure that when the scheme is being put into operation they do not allow the lending institutions to have complete control. I say this because during my negotiations with these institutions I found that while they were very interested in solving their own problems they were not concerned about solving the problems of farmers. We must ensure that, though they must have a say in the arrangements, the authority must rest with the Department of Agriculture. We must ensure that the banks do not merely solve their own problems. They have a duty under this arrangement to solve the farmers' problems. We must ensure that the banks do not merely reduce their own liability and that whatever benefits come from the scheme are not channelled only to them.
I question also the sincerity of the Minister for Finance. In his budget speech he said that a final amendment of current expenditure provisions which he should mention related to the reduced interest rate scheme for farmers in severe financial difficulties and was due to come into operation on 1 April. The Minister said that the State's contribution to this scheme would be made mainly through the tax code but that some direct Exchequer repayments were required. He went on to say that the original provision for these repayments was £4 million but that this could be reduced to £1.5 million for this year because of the late starting date. That was a misleading and incorrect statement, and one can only be horrified that the Minister should have seen fit to make it. In our budget we proposed a provision of £4 million in this respect. This amount was absolutely necessary to compensate the ACC for their contribution to the scheme. There is no point in the Minister coming here and misleading the House. Does he think the people are fools? Had we remained in office the scheme would have been in operation by 1 March and he was speaking about a situation in which it would come into operation on 1 April. Does he believe that one month's delay would make a difference of £2,500,000 in a provision of £4 million? On numerous occasions I described this man while he was Minister for Agriculture as having a live-horse-and-you-get-grass attitude. He has not changed. I am warning the Minister for Agriculture and the Minister of State of this provision. If the ACC are not to be allowed the £4 million that we proposed, they will not be in a position to operate the scheme. Therefore, they must be given the full provision.
It is essential that the ACC get £4 million so that the scheme is operated properly. I will be contacting our spokesman, Deputy Bruton, about this issue with a view to framing an amendment to this effect. We will be having a discussion with the Minister on this issue. He is not fooling anybody when he states that a later starting date of one month will mean that the provision can be reduced to £1.5 million. We are all aware that the ACC are not in a position to make this money available. They do not have great profits and any they have is needed. We must remember that the ACC is a non-profit making organisation. The Minister should restore the £4 million because otherwise it will not be possible to operate the scheme.
Under the scheme £70 millions of capital will be grant-aided through the ACC and £120 millions will be made available for grant purposes through the commercial banks. According to the figures that are available the total indebtedness of agriculture is about £1,300 millions. A total of £6 millions is being made available for the subsidising of the 5 per cent development loan and that will subsidise approximately £120 millions of capital. A similar amount will apply under the national interest subsidy scheme of 5 per cent. That will subsidise £120 millions of capital. The provision of £190 millions in capital for the ACC and the banks leaves us with a figure £430 millions of capital to be subsidised. If one subtracts that from the amount of the indebtedness in agriculture one is left with a figure of £900 millions. I argued before that that figure is inadequate, and I repeat that view. I accept that those figures were submitted to us by the banks and the ACC, but if we will be subsidising only approximately one-third of the total indebtedness of our farmers the efforts being made by the Government will be of minor benefit to the industry. I should like to point out to the Minister for Agriculture that when the applications are in — I understand that a week ago 2,000 applications had been received but I believe the figure will rise to about 7,000 by closing date at the end of June — and it is found that there is a shortfall he is in duty bound to approach the Minister for Finance seeking an increase in the capital allocation for the scheme.
We were careful when drawing up this scheme because it was essential to help the 6,000 or 7,000 lead farmers who are producing three tons of grain per acre, 1,000 gallon cows and have a stocking rate of 9 per cent per acre. They were advised by the Department to develop their holdings and increase production so as to boost exports and help our balance of payments. They are now caught in this situation. There should not be any opposition by the Minister for Finance. I do not trust that Minister as far as agriculture is concerned, because he has a very narrow view of the industry. His emphasis was on handouts to a small number of farmers. He forgot about the producing farmers and the importance of bringing up the level of production so as to create jobs in the agri-business. We are all aware of the importance of the local creamery, provision and hardware stores to our small provincial towns. They are vital. There is no doubt that if this tax-based lending scheme does not get adequate finance it will fail. I am worried about the decision of the Minister for Finance to reduce the amount for the scheme from £4 million to £1.5 million. Is the Minister sincere about that scheme? If there is a shortfall will he make it up?
The lending agencies will be the greatest beneficiaries under the scheme. We have heard a lot about bad borrowing. Financial institutions are always quick to tell us about bad investment and bad borrowing, but we must not forget that if there was bad borrowing there was also bad lending. For that reason the financial institutions must carry some of the penalties attached to bad lending. Those penalties should not all be loaded on our farmers. Senior executives are quick to tell us about bad investment but they must carry some of the responsibility. I have noticed that in the last six months the ACC, and the banks, have returned to penalty interest charges. If the Minister intends making money available under the Bill to the banks he should ensure that they do not pile penalty interest on farmers while at the same time they collect grants from the Government and the taxpayers. We appealed to the Minister before about this decision of the financial institutions to charge between 2 per cent and 6 per cent on top of 22 per cent. If a borrower is not able to meet his commitments he must face that additional interest charge. The Minister should not permit the lending institutions to use the system for their own benefit. The scheme is to benefit agriculture and for that reason farmers should not be charged those penalties.
The ACC have now got into the habit of imposing penalties. That organisation should be careful about the amount of pressure they impose on farmers. The ACC, or the financial institutions, cannot expect a sudden uplift in farm incomes. There will be problems up to 1984 if remedial action is not taken in regard to the greatest enemies of agriculture, high interest rates and inflation. The ACC, a semi-State body, are doing an excellent job but they should not lose sight of the fact that their primary purpose is to help agriculture. By calling in receivers here, there and yonder they are not helping the farming community. There is serious concern about pressure being exercised before every avenue is explored to see if there is a chance of getting farmers out of their difficulties. Before any serious action is taken the ACC should ensure that all options are looked at. I appeal to the Minister to take a serious view if undue pressure is exercised by the ACC or the banks.
I should now like to deal with the question of unemployment. It is interesting to note that according to the latest information 147,672 people are unemployed and that this figure is still rising. While I was holding a clinic in my constituency recently two people came to see me. The first was a man who was in receipt of pay-related benefit. He had a wife and five children and he received £106 per week. In the budget he got an increase of 25 per cent but it seems that the Department of Social Welfare left him short about £4 or £5 and his complaint was that he was not getting the benefit he was entitled to. I made representations and, fair enough, they gave him an extra £3 or £4 and that man ended up with £127.50. That was his benefit after his problem was sorted out. The same night another man came to see me and his position was identical with that of the first man in that he had a wife and five children. He was travelling to work and his wages were £117. His take-home pay was £106. He had received a 6 per cent increase which was the first phase of the wage increase, but he received only £4 and he claimed he should have got £6 or £7. When I looked it up I found that PRSI had taken £2 extra from his wages. The man with pay-related benefit ended up with £127 while the man who was travelling 15 miles a day to his work ended up with £110. This situation is a disincentive to work and will have serious repercussions right across this country, as indeed has happened already. I am prepared to accept that some people are on very low incomes as far as social welfare is concerned, but when you have a situation such as I have described you cannot encourage people to go to work. With that prevailing we have a serious problem as far as short-term benefits from social welfare are concerned. It is disheartening for good, genuine, honest people who want to work and who are not interested in going on either pay-related benefit or the dole unless they are forced to do so, when they find that their neighbour is in a more advantageous financial position than they are although they are working while that neighbour is not working.
The 25 per cent benefit came up in our budget, but remember that it was in compensation for the tax on clothes and short-term social welfare benefit and the food subsidies. The Government came along and operated the 25 per cent but lost the compensation of approximately £140 million. Those are the policies which are being pursued.
I have stated and I continue to say that the present Government must get their economic policies right, and nothing in that Finance Bill will put their economic policies right. The unemployed now number 147,000 and that number will rise at the end of this year. We will see a difficult situation at the social end also. Economic policies are one thing, social policies are another. If you have not good economic policies you cannot afford good social welfare policies. It is as simple as that.
I am worried about the leadership of the present Government. They have not learned anything as far as policy is concerned, and that is the most serious point. They are continuing with the same policies. The by-election in Dublin indicated clearly to them how the people are thinking in regard to the hypocrisy and pretence under which the Government operated for 18 months under the present Taoiseach in their previous term of office, yet they are continuing the same policy. The people have, in plain language, copped them on in that the people know that the Government's present economic policies are not for the benefit of the economy.
The Government in their wisdom have the Finance Bill, 1982, before this House for ratification. Deputy Bruton's amendment is before the House also. It is reasonable to believe that the Bill will be carried, but it has been pointed out clearly in Deputy's Bruton's amendment that the better-off will get benefits from the Bill while the less well-off will have to pay more. If they think that that situation can lead to better policies they are wrong. I support Deputy Bruton's amendments, as will our party, in the interests of perhaps persuading the Minister for Finance to change his mind on certain aspects in the Bill.
