Dáil Éireann debate -
Thursday, 15 Jul 1982

Vol. 337 No. 11

Adjournment of Dáil: Motion.

Minister for Foreign Affairs (Mr. G. Collins)

I move:

That Dáil Éireann, at its rising on Friday the 16th July, 1982, do adjourn for the Summer Recess.

The four months since the Government took office have been eventful in the field of foreign policy and Ireland's involvement has been an active one, both because of the nature of the issues involved and our current membership of the United Nations Security Council. At least two major international crises have arisen over the last few months, one in the South Atlantic following the Argentine invasion of the Falkland Islands, the second more recently in the Middle East as a result of the Israeli invasion of the Lebanon. At the same time, the world faces a period of continuing international tension because of matters such as the situation in Poland and consequent strains in the East-West relationship, the war between Iran and Iraq and tensions in other parts of the world. Also there are important arms control and disarmanent talks between East and West in train and the UN has just completed its second Special Session on Disarmanent.

All of these issues have an impact on our foreign policy, either in our bilateral relations or within the European Community or in wider for a such as the United Nations. Moreover, each of these crises, particularly the Falklands and the Middle East, has confronted the Government with important choices and even dilemmas.

I want to speak first about the Falklands. As Deputies are aware, the invasion of the Falkland Islands faced the Government with the problem of making decisions in a complex and rapidly evolving crisis. There was no doubt that the dispute over sovereignty of the Falkland Islands is a long-standing issue which was the subject of continuing negotiations between Britain and Argentina. But what was equally clear was that Argentina acted in breach of the United Nations Charter and international law by resorting to the use of force in an effort to resolve the dispute over sovereignty unilaterally in its favour. Ireland responded to the illicit use of force by Argentina by voting for Security Council Resolution 502 adopted on 3 April. We also joined with our partners in the European Community in applying political and economic pressure on Argentina to comply with the Resolution and to resolve the conflict by peaceful means. In my statement of 10 April, following the adoption of measures against Argentina I made our position plain when I said:

Following the armed intervention by Argentina, the Security Council adopted on April 3 a Resolution No. 502 which made three clear demands. It called for an end to hostilities, an immediate withdrawal of all Argentine forces and a diplomatic solution. Ireland voted for that resolution because the Government believes that the full implementation of its terms is the best means by which further fighting can be avoided and the principles of the rule of law rather than the rule of force in international relations upheld.

It is for this reason and in defence of that principle also that we together with our Nine partners in the European Community in a spirit of mutual solidarity have decided to unite our political and economic efforts to press for and to promote full implementation of the terms of Security Council Resolution 502.

This is the sole aim of the measures decided on by the Ten in Brussels earlier today.

It follows that it was no part of our purpose in adopting these measures to see them used in support of a military as distinct from a negotiated solution to the conflict. And when it became clear that this was the likely course which events were going to take, the Government decided that it would no longer be appropriate to maintain the measures in force. As Deputies are aware, we were not alone in this regard.

While the Government believed that it would not be appropriate to continue to apply measures to Argentina in a manner which implied political support for a military solution, at the same time, we took steps to ensure that the measures being maintained in force by our Community partners would not be circumvented.

As I said at the outset, the Falklands crisis also impinged directly on our current membership of the UN Security Council. In calling for a meeting of the council, we did so conscious of the fact that sooner or later, when and if the mediation efforts by individual states were not successful the council would be obliged to face their responsibilities. Indeed as early as 10 April I had said and I quote:

For its part, Ireland will continue its own efforts and is ready to join with others in the search for diplomatic solutions.

The moment is fast approaching when the peace-making and peace-keeping machinery of the United Nations if they are resorted to may be able to provide as in the case of other conflicts a practical means by which to avert a major clash, greater bloodshed and further suffering.

I have instructed the permanent representative of Ireland to the United Nations, Ambassador Noel Dorr, to explore every possibility in this regard.

In giving practical effect to our request for the meeting of the Security Council, the Government was concerned to ensure that this was fully in accord with and complementary to the efforts of the UN Secretary General to establish a framework for negotiation of a peaceful and honourable settlement. For any country to act in these circumstances carries certain risks. For Ireland, faced with a situation in which its nearest neighbour and a partner in the Community was involved, the risks of being misunderstood are obvious. Nonetheless, the Government believed that it had a duty to speak and to act in defence of principle and proportion in this tragic conflict. As we now know, the issue was not resolved through peaceful negotiation. History will judge whether and to what extent the outcome might have been otherwise. Suffice it to say, now that the guns are silent in the South Atlantic, the difficult task of reconciliation and of creating conditions for an enduring settlement remains.

More recently, and even as I speak, the international community faces the unfolding of yet another tragic episode in the long cycle of violence, bloodshed and injustice in the Middle East. Successive Irish Governments have maintained a clear position on the issues at stake in the Arab-Israeli conflict. Like many political conflicts, that of the Middle East is a conflict of rights — the right of Israel to live in peace within secure and recognised boundaries; the right of the Palestinian people to justice, to self-determination and the consequent possibility to realise this right in the establishment of their own State and to assume responsibility for their own destiny as a people as Israel has done. We wish to see this conflict resolved equitably, by compromise, through the negotiation of a comprehensive just and durable settlement.

I have little doubt from the sentiments expressed by the vast majority of those who participated in the debate on the situation in Lebanon which we had here on 16 June that Deputies endorse and indeed the public-at-large fully support, in a word have confidence in, the Government's approach to the crisis in Lebanon and the wider conflict in the Middle East. The Government have been active in efforts to bring about a ceasefire in the Lebanon. Resolution 509, which called for an immediate and unconditional withdrawal by Israel, was sponsored by Ireland.

More recently, Ireland has joined with its partners in the Community in speaking out clearly and firmly in regard to Israel's conduct in Lebanon. Deputies will recall that on 9 June in Bonn, the Foreign Ministers of the Ten vigorously condemned the new Israeli invasion of Lebanon, which was described as a flagrant violation of international law.

At the European Council at the end of June, the Taoiseach and I participated in an extensive and thorough discussion of the situation in Lebanon. As a result of that discussion, the Ten issued a statement setting out the main lines of our approach and emphasising the need for specific measures to preserve the existing ceasefire, and to provide for the immediate disengagement of the forces in conflict as well as pointing to the necessary practical arrangements required for a definitive peace in Lebanon. In this connection, the Government are glad that the policy of the Ten in regard to Lebanon gives particular weight and emphasis to the role of the United Nations.

We believe that the UN have an immediate role to play in consolidating a ceasefire and disengagement of forces in the Beirut area. In the longer term the UN should also be placed in the position to provide an adequate peace-keeping force with a clear and unambiguous mandate. In our view such a force is the best means of ensuring that Southern Lebanon can be restored to Lebanese sovereignty and can be kept free form enclaves, private armies and heavy weapons so as to make it possible for the population there and in the neighbouring areas of Israel to live their lives free from the cycle of violence and reprisal. Ireland, for its part, is contributing in practical terms to the existing UN force in the Lebanon, the mandate of which has been extended temporarily until 19 August. I am confident that the House will agree that Ireland will continue to contribute to the efforts of the United Nations to bring peace to this country whose innocent population have suffered so tragically.

In this connection it is important to stress the achievements of UNIFIL to date in very adverse conditions over the last four years in the course of which some 34 soldiers, including four of our own, have been killed. The success of a peace-keeping force is fundamentally dependent on the goodwill and co-operation of the parties to any conflict as well as that of the community to which it is endeavouring to restore a measure of peace and stability. When UNIFIL were established there were barely 1,000 civilians still remaining in its area of operation. Today more than a quarter of a million people are living and working throughout the UNIFIL area. Peace in practical terms, the conduct of people's daily lives free from fear and danger, had crystallised round the various UNIFIL positions in South Lebanon. It is important therefore to emphasise that a lasting and positive peace in Lebanon, not just the absence of war and strife, will require patient and painstaking work and the co-operation of all sides.

In our view the UN and the forces operating under its auspices are best placed to help create the conditions under which peace can be consolidated. For this reason it is dismaying and disquieting to see the extent to which in recent days insinuations, wholly unfounded, have been made about the integrity and impartiality of the UN forces. No one in this House, or indeed outside it, should give currency to attempts, ill-advised or mischievous, which serve to undermine the prestige of the UN and of the forces, including our own, serving under its flag.

I know I speak for all of us when I say that we take pride in the magnificent work being done by General Callaghan, the Irish commander of the UN force in South Lebanon, and the Irish contingent in that force. I can assure the House from recent contacts which I have had with many prominent leaders abroad, including in particular the Secretary General of the United Nations, that they share our great admiration and respect for the Irishmen who are currently in the service of the United Nations.

I referred earlier to the UN Second Special Session on Disarmament which ended recently. This special session did not arrive at the substantial results we would have desired. Given the state of international relations at the moment, this is perhaps not surprising. Nevertheless, the inability of the special session to agree on concrete measures of disarmament, which are now more necessary than ever, must be counted as a setback. Nevertheless, a number of valuable proposals were put forward and these will be considered next autumn by the UN General Assembly.

In the statement which the Taoiseach made on behalf of Ireland in the general debate which opened the special session he set out the Government's policy on the urgent and increasingly serious problems of arms control and disarmament. He also put forward a number of specific proposals — practical measures — which, if implemented, would help to reverse the dangerous spiral of the arms race. Moreover, now that it is proposed to expand the UN Committee on Disarmament, Ireland has offered to become a member of this important multilateral negotiating body. The Government's policy, as enunciated by the Taoiseach, and the practical measures he advocated, are also fully in line with the policy of all previous Governments since we joined the United Nations. From the response which the Taoiseach's address has evoked from members of the public throughout the country, I am confident that this approach is entitled to the support of this House.

One of the central tasks facing the international community at the present time is the achievement of a stable, functioning and just global economic order. Economic forces left entirely to themselves tend to produce growing inequality. What is at issue now is the capacity of the international community, through discussion and negotiation, to reverse the present unfavourable trends in the world economy which affect rich and poor alike. Of course, the North-South dialogue will not by itself solve all the current world problems, many of which are political rather than economic, but the world community can have no real stability until it faces up to the basic challenge which the widening gap separating rich and poor countries represents.

Our involvement in international development co-operation is an essential element of our foreign policy. Ireland has participated actively, and continues to do so since I took office as Minister for Foreign Affairs, in the discussions aimed at achieving a new international economic order. Regrettably, the prospects for the launching of the long awaited round of global negotiations do not appear to be particularly promising at the present time. However, we continue to hope, following the consensus apparently achieved at the recent Versailles summit of the seven major industrialised States, that progress can be made.

Side by side with the wider debate on global economic problems, Deputies will know of the growing attention which we and our Community partners have given in recent years to building up and extending our relations with the developing countries. The Community's principal instrument of co-operation with developing countries is the Lomé Convention, governing relations with 62 African, Carribbean and Pacific countries. For our part we are also anxious to see better Community links with other developing regions, in particular South East Asia and Latin Ámerica, and I was very happy to avail of the opportunity provided by Commissioner Pisani's recent visit to Dublin to discuss our ideas on this and other matters with the member of the Commission responsible for mapping out the Community's development co-operation policies in the years to come.

In this important area of the Community's external relationships, there is, as the Brandt Report so forcefully reminded us, no time to lose. The urgency and critical nature of the problems of underdevelopment is nowhere better illustrated than in the fight against world hunger, which I am glad to see is now the top priority as far as the European Community and, indeed the whole international community, are concerned.

The Commission have recently put forward a programme of food strategies designed to assist the developing countries become as self-sufficient in food production as they possibly can. I need hardly say how strongly I support the idea behind the Commission proposals and at the Development Council two weeks ago in Luxembourg I was able to join my colleagues in agreeing to implement right away food strategy programmes in a number of developing countries, including, I was happy to note, one of our own bilateral priority countries, Zambia.

Indeed, this year it is possible to increase the size and content of our programmes in Tanzania and Zambia to bring about a better balance of distribution among our priority countries. Also for the first time we are enabled to extend programme assistance to Zimbabwe, in response to the needs of that country following the struggle for self-determination.

In a word, this Government, despite the present very difficult budgetary situation, have maintained their commitment to the developing world. In this context I am particularly anxious that Deputies should have a better insight into the increasingly complex nature of our involvement with the Third World. The recent decision to establish a Joint Committee of the Oireachtas on Co-operation with Developing Countries is an essential step in the process of establishing and clarifying Ireland's role in international development and an essential complement to the work of the Advisory Council on Development Co-operation, as I had occasion to remark when I addressed the Council in May.

This Government are fully committed to Anglo-Irish co-operation directed towards a resolution of the problem of Northern Ireland. When last in office we succeeded in making a major step forward in our relationship with our nearest neighbour. It is widely acknowledged that following the Taoiseach's meeting with Prime Minister Thatcher in 1980 the Anglo-Irish relationship entered a new and hopeful phase, with a clear acceptance by the British of the need for both Governments to bring forward policies to achieve peace, reconciliation and stability in this country and to further develop the links between our two countries. This historic initiative by the Taoiseach was decried at the time by some of those who would normally purport to seek an improvement of relations between Britain and Ireland. Many of these very same people now speak of a deterioration in the Anglo-Irish relationship. Their motives were suspect then and they are suspect now.

The Government's initiative during our previous term of office resulted in a new Anglo-Irish structure which we are still completely confident can be developed and used to make progress towards resolving the underlying political problem in Northern Ireland. That we had succeeded in putting a new and positive shape on our relationship with Britain was clearly recognised by the Fine Gael and Labour Parties during their brief period in office. No attempt was made to alter the course we had set, and Deputy FitzGerald's meeting with the British Prime Minister was an opportunity to further promote our objectives within the newly established structure. It is with regret that I must remind the House of the previous Government's failure to give their full dimension to the Anglo-Irish institution, which was already taking shape while we were in office. It was most unfortunate and a great disappointment for this country that Deputy FitzGerald should have failed to pursue vigorously the establishment of the parliamentary dimension of the Anglo-Irish Intergovernment Council when he met Prime Minister Thatcher. This was the more unfortunate in view of the fact that all parties here agree on the desirability and potential of such a body, which would in particular open the possibility of Northern Ireland representation in Anglo-Irish discussions.

Mr. J. Bruton

How far has the Minister got with it since he came to office? Look at the beam in your own eye.

Acting Chairman (Mr. Moynihan)

The Minister must be allowed to proceed.

Mr. G. Collins

The weak approach of the Coalition parties ran directly counter to the consensus which had emerged in recent years among responsible leaders in Ireland and Britain that the problem of Northern Ireland demanded a joint approach by our two Governments.

I regret that in recent months the British Government have been less than wholehearted in their commitment to the approach which they had agreed with us. Earlier this year they embarked on a misguided and unilateral initiative which in effect ignores the wider Anglo-Irish dimension within which the Taoiseach and Prime Minister had agreed to tackle the problem of the North — a problem which affects both our countries so much. Mr. Prior's failure to properly consult with the Government here in the elaboration of his proposals has already been put on record by me — and indeed admitted by him in a recent parliamentary reply in Westminster — and I wish to state my view that the British Government's approach on this matter has been contrary not only to the spirit but also to the letter of our new arrangements. The degree of reasoned opposition to the British proposals — and, as Deputies are fully aware, the Government have been unable to approve of them — ought to have made Mr. Prior think again. Instead they have now completed their painful passage through the House of Commons and Mr. Prior seems determined to force his scheme on Northern Ireland by what can only be described as desperate means.

The Government have already made clear our fear at the consequences which may follow from yet another failed British Government initiative. With the announcement in the last few days of voting in the Autumn for the proposed Northern Ireland Assembly, our apprehension grows greater. This institution is to be in and for Northern Ireland alone and its intended role is to restore a devolved executive in and for Northern Ireland alone. Few Deputies will not see such a concept as retrograde and insufficient and few in this House will likewise fail to deplore the retreat by the present British Government from the commitment to prescribed powersharing in Northern Ireland. This commitment has been a constant in the policy of various British Governments since 1973. Instead, the evolution of affairs within the new Assembly is to be left to the free play of the political parties. Everybody knows which political tradition will dominate in such a situation and we hear already that dominant unionist interest declare its attitude — an attitude which has not varied over 60 years and which, not surprisingly, is marked by contemptuous rejection of the present British plan. Irish nationalist opinion is alert to the dangers ahead. They are the same dangers nationalists thought they had left behind them quite a little time ago.

I regret the present line of policy of British Ministers but despite this we are determined to use and to pursue the development of the institutional framework established by the two Governments. It is still there and in fact has been functioning normally in recent months with five ministerial level meetings since this Government came to office. It offers the hope of avoiding disaster and a clear way forward. It remains our conviction that a joint approach offers the only hope of ultimately resolving the situation in Northern Ireland.

It saddens me that at this time some Members of the Opposition parties have joined in painting a gloomy picture of the state of Anglo-Irish relations. Such a picture can only be in the interests of those who seek to thwart the processes of Anglo-Irish co-operation for their own purposes. It is significant in my view that this kind of talk is most prevalent in certain sections of the British media often reflecting the opinions of those in Britain who have never been well-disposed towards this country.

The reality is different. Where interests are so healthily interlinked, relations do not come to a halt. As I have already said, useful co-operation has pressed ahead in recent months. Much of it has directly beneficial effects throughout this country — my colleague's discussions about the use of our natural gas with his British counterpart is an example of this. We anticipate future meetings of the Anglo-Irish Intergovernmental Council in this spirit of constructive co-operation as appropriate and necessary and at every level. But let me make it absolutely clear that co-operation is by definition a two-way process. In the fields of political, economic and security co-operation this Government are determined to play their full part in bringing peace, stability and reconciliation to our people. We expect the British Government to do the same. Whatever our temporary differences, we in these two islands have so much in common that Anglo-Irish co-operation is vital in our joint interest. But it must be full and wholehearted in its inspiration and in its working. We cannot accept a selective or inconsistent approach to mutual co-operation. I, therefore, ask all the Members of the House to support the Government's efforts to further develop the agreed Anglo-Irish institutions as we press for a joint initiative which will directly tackle the problem of Northern Ireland.

In our determination to promote such an initiative and in line with the Taoiseach's declaration that the Northern Ireland problem is the first political priority of this Government, we have made efforts to obtain the understanding of all other concerned Governments for our objectives. Indeed this problem affects not just the people of Ireland and Britain but it has had repercussions across the Atlantic and is deplored by many as a continuing threat to the stability of the Western community of nations.

In office we have sought to maximise the potential of the American dimension in moving towards a solution of the difficulties in Northern Ireland. On his first visit there this year the Taoiseach sought to enlist the support of the current US Administration and in particular to encourage a commitment on its part to Irish unity. All the indications are that the Taoiseach's visit made a major impact and there are encouraging signs that our position is gaining understanding and support at the highest levels in the United States. I can assure the House that the momentum created by the Taoiseach's talks with President Reagan is being exploited to the full by my Department and its personnel in our Embassy and other offices in the United States. The recent visit of an influential group of our friends from both Houses of the US Congress marked a further step in the process by which we hope to give Irish-Americans and our other friends in America a positive policy to support. As the Taoiseach said in his New York address during his most recent visit there, this Government will work with all those in America who share our ultimate objective of the unity of the people of Ireland and our abhorrence of violence. To this end we are determined to promote closer and more fruitful contacts with all our friends there.

In our contacts with other Governments too, particularly among our European partners, there is increasing understanding of our policies on Northern Ireland and, in particular, a ready support for a joint Anglo-Irish approach to the problem. This growing conviction in other countries that an Anglo-Irish context is the appropriate one for resolving the problem is a rational and encouraging development.

Let the House be assured then that this Government are committed to the most vigorous pursuit of our political objectives regarding Northern Ireland. We have every reason to be encouraged by the degree of international acceptance which they have already gained and, with the support of the House, we are confident that these objectives will be achieved.

Mr. J. Bruton

I propose to deal later in my contribution with the negative and unconstructive remarks made by the Minister in regard to what he titled Anglo-Irish relations. What he was talking about were relations between Irish people in this part of the country and Irish people in the other part of the country. Yet he chose to see this in the context of Anglo-Irish relations rather than relations between Irish people. It is this fixation with Britain on the part of Fianna Fáil which has thrown a blight over relations between the people within the two parts of this country and is mainly responsible for the fact that we have made no progress whatever towards the achievement of our declared objective in this area. However, I shall deal with this matter in greater depth later in my contribution.

The best way to judge this or any other Government is on the basis of their own statements, what they say they are going to do, and compare that with what they actually achieve. By comparing their quoted aspirations since they took office late in 1979 with actual achievement since then the Taoiseach and the Government can be shown to have failed miserably in the four areas which they themselves identified as being of major importance. These are: jobs, reduction in borrowing on the current budget deficit, energy conservation and the promotion of North-South co-operation. They have failed in each of these four areas that they set for themselves as the areas in which they sought to make major achievements. I will demonstrate this by quotations from the Taoiseach and by comparison with results.

In the Adjournment Debate on 18 December 1980 the Taoiseach said that the economic policies urged by him gave priority to the maintenance and provision of employment. He spoke of how his statements in this matter had won approval from people in Europe and elsewhere. Compare his aspirations with the reality. At the time he spoke unemployment stood at 118,000 people; it now stands at 154,000 people. Compare the Taoiseach's statement of his priorities and his clear inability to achieve them. Compare the fact that we now have unemployment at 154,000 people with the fact that at the time the Taoiseach took office in December 1979 unemployment was at a level of no more than 85,000.

I would also draw attention to the fact that the Taoiseach has consistently made statements in the House to suggest that he was giving a major priority to the elimination of the current budget deficit. This goes right back to 1979. I quote from column 2042 of the Official Report of 13 December 1979. He said:

Government borrowing, which helps to fuel both this deficit and inflation, is simply too high.

In 1980 he said we must restrain current expenditure so as to achieve a reduction in the current budget deficit in order to free as much as possible of our resources for investment and as a contribution to reducing the rate of inflation. He has been talking about this, but the evidence of his failure to achieve any of what he set out to do in regard to the current budget deficit is to be found in his own statement in the confidence debate a few weeks ago. In that debate he said that now that trade in the European Community had begun to revive, we could begin to phase out the budget deficit. He said in 1979 he was going to do something about it; he said in 1980 he was going to do something about it; and now in 1982 he is telling us he is going to begin to do something about it. Clearly, there rarely has been such a mismatch between performance and aspirations as there has been on the part of this Government in regard to this area.

I would like to bring Members' minds back to the day when Deputy Haughey was appointed as Taoiseach. His first press conference was primarily concerned with the priority he was going to give to the energy problem. He said at column 2042 of the Official Report of 13 December 1979:

In 1972, this country spent £53 million in buying oil from abroad, or 2.4 per cent of national output. This year we may well spend close to £500 million or about 6½ per cent of output ....

These facts will, I hope, give some of the background to my decision to put so much emphasis on energy policy .... If we solve our energy problem, we will have gone some way towards solving our balance of payments and our inflation problems ....

What has the Taoiseach to show for all this emphasis he was putting on energy policy? At the time he took office he said we were spending 6½ per cent of our output on imported oil. In 1981, after all this emphasis, we were spending 8.4 per cent, two percentage points more of our output on imported energy. That is a clear indication of failure by the Government in the areas that they had selected as those in which they intended to have the greatest achievement.

The Taoiseach told us in 1979 that he hoped to take a keen interest in encouraging and promoting the development of social, cultural and economic links between North and South. What social or cultural links have been achieved between North and South as a result of the Taoiseach's efforts? Has the Taoiseach visited the North to talk to people in Northern Ireland? Has he even gone so far as to allow his presence to have the beneficent effect that one would hope it would have on the people of Northern Ireland? No, he has not even crossed the Border to visit the people for whom he expresses so much concern about achieving unity with.

There have been no improvements in social or cultural contacts as a result of any initiative by the Taoiseach. There have, of course, been contacts with the British Government; but we are talking about contact with Irish people in Ireland. Nothing has been done to achieve a better relationship with the one and a half million Irish people in Northern Ireland about whom we speak so much in regard to having a political unity with them. His own cherished Anglo-Irish relationship has been damaged by the fact that he has, without any particular necessity and without achieving any result as far as the bringing about of cessation of hostilities is concerned, gratuitously adopted a radically different position and to some degree an apparently offensive position in regard to the conflict in the Falkland Islands. I am not saying that, if one were to look at the matter dispassionately and if Ireland were a country somewhere in the Pacific, we might not, having looked at the conflict between Britain and Argentina over the Falklands, have come to a view not totally different from that of the Government. But Ireland is not the Pacific.

We share a land boundary with Britain. We are seeking to get something from them and, in particular, to get them to encourage development in Northern Ireland along lines that would be conducive towards bringing the people of both parts of this island together. We cannot ignore these realities and take stances solely for domestic political consumption that are so potentially damaging to our ability to achieve anything.

This has been very eloquently borne out by the statement made by the Minister for Foreign Affairs. He very curiously criticised the previous Taoiseach, Deputy FitzGerald, for failure to pursue adequately the parliamentary dimension of the Anglo-Irish Government Council when he met Prime Minister Thatcher. He and the Taoiseach have been in office for the past four months. What have they done about getting a parliamentary dimension to the Anglo-Irish Council? What results have they to show for their four months as against our seven months? None at all. But he does not mention that because there has not been any substantive meeting between himself and Mrs. Thatcher at which this could be discussed. Why has there been no substantive meeting between himself and Mrs. Thatcher at which this might be discussed? The reason lies in the unnecessary stance taken by the Government in regard to the Falklands Islands crisis. That is why they have made no progress. They should not criticise the previous Government for lack of progress on something in regard to which they have failed to make any progress. The whole contribution of the Minister in regard to the Northern Ireland/Southern Ireland relationship seems to be concerned exclusively with its British dimension, its American dimension and its European dimension. He did not mention the Asian dimension of the Northern Ireland problem but I am sure the next time he makes a speech he will be telling us he has gone to see the Prime Minister of Singapore about solving the Northern Ireland problem. He has not told us anything about going to see the political parties in Northern Ireland or about talking to the people in Northern Ireland about this problem. It is all about trotting off to Washington or bringing people from Washington over here or trotting off to London to solve an Irish problem involving Irish people.

The whole approach of the Government seems to be one of speaking above the heads of the people in Northern Ireland to other people about the problems of Northern Ireland. If you want to achieve co-operation and a constructive approach from people whose interests you are expressing it is common good manners to talk to them before you start talking about them over their heads to someone else.

That is reasonable and good manners in regard to our own personal relationships with anybody. Yet in regard to achieving unity of hearts and minds among the people in this island, this Government do not act in accordance with that tenet of good manners of talking to the people concerned directly as well as talking about them to someone else. The Government seem to see the problem in Northern Ireland as a diplomatic problem. It is not a diplomatic problem that can be solved in the chancelleries of the world at cocktail parties. It is a human problem involving people who disagree with one another and with us. These disagreements must be eliminated by patient conversation, discussion and co-operation over a long period. These disagreements will only be exacerbated by talking above the heads of those people. Those are my remarks about what I regard as an unfortunate passage in the Minister's speech which we could have well done without.

Before leaving the subject, however, I will make some reference to something he said. He said, "I would, therefore, ask all the Members of the House to support the Government's effort to further develop the agreed Anglo-Irish institutions as we press for a joint initiative which will directly tackle the problems of Northern Ireland." I hope that we will be able to support the Government in their initiatives, but the Minister commenced his contribution on this subject with a gratuitous attack on Deputy FitzGerald in regard to his activities as Taoiseach in this field. This certainly is not creating a climate in which the type of co-operation which he pretends to seek is most likely to be willingly forthcoming. However, I know that my party will not pay undue attention to these gratuitous remarks on the part of the Minister. So long as the views I have expressed in regard to the need to pay primary attention to the concerns and interests of the people directly affected in Northern Ireland are taken into account, that constructive dialogue can be opened between the Government and the main Opposition party in regard to this area.

I would like to turn back to the economic area and refer again to something said by the Taoiseach in this field. He said in the confidence debate that export-led growth is now within our grasp. However, this optimism does not seem to be matched in other more informed fora in regard to economic development. The Algemene Bank Nederland in their report published in June this year say that the anticipated up-turn in the world economy has not yet materialised and that the OECD, who in December forecast a 1.25 per cent growth in world production in 1982, have now revised this growth figure downwards to 0.3 per cent. This world economic recovery on the basis of which we can postpone all hard decisions here on our own economy is always around the corner, but either it never comes around the corner or we never go around the corner, because for the last few years we have never seemed to meet this wonderful economic recovery. I advise the Government not to put too much hope in a world recovery in demand and that they had better put first priority on putting our own house in order so that we can survive here whether or not there is a recovery in world demand.

The Taoiseach said that there is widespread reluctance on the part of the community to accept further increases in taxation, but he went on to say that if it were put to the Irish people — I can imagine him commissioning the opinion poll himself — as to whether they want more Government services and thus more taxation, their answer would pretty universally be against higher levels of taxation. Again, I agree with the Taoiseach, but unfortunately he seemed to be mis-stating or misunderstanding the problem. If we are to reduce our current budget deficit the problem is not whether we want more services, because if we are to reduce our current budget deficit without increasing taxation we must reduce Government services. It is not a nice, kindly choice, would you like more of this or less of that? If we are to reduce our current budget deficit we must have either more taxation or fewer services. You cannot close the gap any other way. Yet the Taoiseach seems to have the idea that there is some soft option, if we are to go by the statement he made as reported in the Official Report of 1 July 1982, column 564, volume 337. That is not so. There is no soft option, and I hope the Taoiseach will not attempt to delude the people any longer that there is.

I would like to say something about a matter which looms so large in many government speeches, that is the great economic and social plan which we are to see some time after athe Dáil has gone into recess and can no longer discuss it and after the electors of Galway East have voted and cannot take it into account. This plan is an excuse for not answering any questions at the moment. If a Government Minister is asked what they are going to do about this employment, that public sector pay, taxation, the answer always is, "I cannot tell you now but wait until we produce our economic and social plan". An economic and social plan which is an excuse for not answering legitimate questions about the Government's economic policy now is worse than useless. Of course, it is very hard to be against planning. Who could be against planning? However, the record of the present Government party in this matter has not been particularly hopeful. The Government have changed their view about even who should be doing the planning.

The Taoiseach said in 1979 that he believed that the planning function in our economy should be concentrated in one Department so that there would be no unnecessary mixing of priorities. As a result he abolished the Department of Economic Planning and Development and put the planning function into the Department of Finance, a very good move. Having said that, he has now proceeded in this economic plan to take the function of planning away from the Department of Finance and have the plan drawn up in his own Department by a civil servant who is now responsible to the Taoiseach personally. In other words, the Taoiseach is acting contrary to his own prescribed advice that planning should rest clearly in one Department. He has a bit of it in the Department of Finance and a bit of it in the Department of the Taoiseach. That will not lead to rational planning or the type of constructive co-operation which is necessary from all arms of Government if it is to be effective.

This plan must first clearly state the unemployment problem. It must not attempt to pretend that it is any less than it is. Secondly, it must clearly and honestly state the problem that we have with our public finances and not pretend that it is simply a question of postponing something if we want to reduce the budget deficit. It is far more serious than that. We face the prospect of either reducing services or increasing taxation. I hope that the plan will be honest about those matters. Thirdly, I hope that the plan will set specific, quantified targets for Government expenditure, for taxation in terms of percentage of GNP and £s raised, for inflation, for agricultural production and for industrial production, broken down by sector and into figures, so that if we fail we will see where we fail or we can ask why we have failed. Also, it is vitally important that the plan be linked in to Government expenditure. Every Department are spending every year in substantial quantity but nobody ever asks whether any of this money is achieving any of the alleged objectives of the Departments spending it. We need a plan which says that £X million is being devoted to the Department of Trade, Commerce and Tourism and that is expected to achieve Y jobs and Z new industries here. We must link in the plan objectives to Government expenditure. Up to now we have had the experience of having plans introduced which involved the Government's planning everybody else's activities except their own. As a result we had aspirations about Government expenditure which were far exceeded in the actual outcome as against what the plan set out to do.

There is a need to reform the public service. Today 26 per cent of our work force are in the public sector as against 16 per cent in 1960. The Devlin Report of 1969 recommended far-reaching reforms of the public service but practically nothing has happened in this regard. I have asked questions about this under the headings of mobility within the public service from one Department to another and the bringing in of people from outside and I have ascertained that since Devlin reported 23 officials in the entire country have moved in or out of any Department as a result of the mobility scheme recommended by Devlin. In respect of 11 of the 19 Departments of State no civil servant has moved anywhere as a result of that scheme. Of the 23 who moved, 11 were in one Department, the Department of Labour. Devlin recommended the establishment of an Aireacht which would do the policy making and also an executive unit that would execute the policy so as to avoid the situation of Ministers being bogged down in administration and consequently being unable to make the real decisions that are necessary in regard to policy. Seven of the Departments of Governments have not done anything concrete yet about establishing an Aireacht in their own areas and three of them, including the Minister's Department, say that the recommendation does not even apply to them. It can be said that only three Departments have unambiguously introduced the Devlin recommendations in regard to that vital matter.

Devlin suggested also that there be open competition throughout the whole public service in respect of all important senior promotions such as secretaries, deputy secretaries and assistant secretaries so that the best man would be got for the job, regardless of where he came from. Nothing has been done in that area in all those years since 1969. I appreciate that successive Governments have been responsible for this failure. Indeed, my party held office for a significant portion of the period in question, but the fact is that we must not start preaching about efficiency in the market sector of the economy while the public sector have failed so clearly to do anything about improving efficiency in accordance with the recommendations that we commissioned and accepted. If we are to become a more efficient State the key watchword on economic policy should be an old fashioned one — more efficiency and more value for money everywhere. In that way sufficient jobs will be created.

Another area where we must act is that of creating the incentive to work. Between 1978 and 1981 long-term social welfare benefits increased by 90 per cent while the corresponding short-term benefits increased by 70 per cent although wages for people working increased by only 60 per cent. Clearly, the gap between what one can get while not working and what one can get while working has narrowed. Since then social welfare benefits have increased by 25 per cent while wages have increased by about 13 per cent. This means that the incentive to work is being diminished further. If we are to put this country back on its feet we must provide the incentive to work, and that is why our policy of introducing taxation in respect of short-term social welfare benefits was right and why the Government were wrong to have acted to reject that policy. However, I understand that most of the Fianna Fáil back benchers believe now that we were right on that issue. Perhaps they agree also that most of the other proposals in the budget we introduced were correct also.

We must look, too, to the services and the professions for more efficiency. We had the incident recently of the barristers' profession restricting entry to that important profession. That will have the result of increasing legal fees and costs. Anyone who wishes to settle anything in the courts will have to pay more, because the availability of fewer barristers will mean that they will be able to charge more. That sort of restrictive practice whether in the barristers' profession, the medical profession or any other, must be eliminated. I trust that the Government will take a strong line on enforcing the restrictive practices legislation so that we may be rid of all those restrictive practices in respect of entry to professions or to trades, practices whereby only people with certain artificial qualifications are allowed to perform certain functions while other people who are equally able to perform those functions are prevented from doing so.

We must take action also on transport policy. The lack of a coherent transport policy and the lack of liberalisation in regard to the State monopoly on transport in many sectors of the economy has been one of the main reasons in stifling efficiency and preventing firms from expanding as well as causing extra costs to apply in Ireland compared with the other countries with which we must compete. The paranoiac reaction of CIE to the criticism published recently by Dr. Sean Barrett shows how far the company are prepared to go to prevent a view being published with which they do not agree. It would not seem to indicate that they have a very tenable case. Clearly there is a need for the Government to look forcibly at this area of transport policy so as to achieve the maximum efficiency in the interest of the community.

We need to have much greater efficiency also in the area of educational expenditure. There are wide divergences between the cost per student in various types of higher education as well as in various types of secondary education. It is obvious that in some instances we are not getting good value for money in this area and at the same time we are not spending enough money on other areas of education because of waste in the areas I have mentioned.

It is in all of these areas to which I have referred that we can really do something about bringing about more efficiency in our economy. If we talk about boosting aggregate demand, of pumping money into the economy, unfortunately the efforts in that area mostly benefit people outside the country. This is because demand pumped into the Irish economy translates itself quickly into imports and consequently into extra jobs in Japan, America or elsewhere. But if we concentrate on making our own economy more efficient in the areas of education, transport, of public sector reform and in the area I have mentioned so often, of this House itself, any benefits we derive will be kept entirely within our own economy. That is the sort of emphasis that I should like to see the Government give force to in their economic plan. I wish them success in that regard.

The Leader of this party has offered to the Government constructive discussion in regard to the content of the economic plan. I have suggested that there should be an inter-departmental committee on the economy where we could discuss the content of the Government plan. Obviously, we will not agree about all the measures that the Government will propose but at least we can agree on the facts. Because the parties do not agree on the facts at the moment, both Government and Opposition can afford to make promises that the country cannot afford. I invite the Government to respond to our suggestion and I look forward to the Taoiseach indicating such response when he intervenes in this debate tomorrow.

Mr. M. O'Leary

I shall commence my contribution to this debate by posing the question to the Government side: is there anything that divides the Government from any party on the Opposition benches in the matter of recognition of the seriousness of the crisis in which we find ourselves in the country? The answer to this question is that it appears to me now at any rate — if one is to judge by the tenor of recent Government pronouncements and speeches — that there is very little difference of perception now between Government and Opposition speakers on this point. In perception there appears now to be recognition on the part of Government Ministers that the economy is in deep crisis. Of course there may still be entertained on this side of the House a lack of trust in the matter of their willingness to take action. But, in matters of perception, Government Ministers are now competing, one with the other, in saying how serious is the situation and how drastically needed is remedial action. To the extent that this agreement on perception has arrived we must accept that it represents progress. When one considers that Members of this Government were speaking otherwise quite recently it represents progress for part of this Government, by the more clear-sighted elements within this Cabinet, from the totally confusing position adopted by them last March.

Casting our minds back to March last, then it was the firm of bloom and boom was in the ascendancy. That was the type of speech one heard from the Government benches. One had the Minister for Finance making the point of bloom and boom in headlines in this optimistic assessment of our position, as contrasted with the gloomy speeches of their predecessors in government. We were in the spend, spend phase. Public expenditure commitments were entered into as if money, borrowed or otherwise, had gone out of fashion. The so-called savage budget of the Coalition Government was totally out of fashion. We were told that Ministers of the previous Government had talked down the economy, that we had frightened off foreign investment with wild statements. Our statements then in that Government, our perception then, led us to take action throughout that government period about the seriousness of the crisis in the public finances but those statements and actions of ours were derided. We were, one and all, taken to book by the present Taoiseach and many of his Ministers.

Now, of course, things have changed. In fact one might say that some of these born-again Ministers are beginning to embarrass us with the force of their late conversion. They speak with all the zeal of the newly-converted. Of course others in the Cabinet are a little confused, perhaps those who are not working in the economic area and, in times of great temptation, such as by-elections, are given to relapses into old habits. We could forgive them these relapses. When we remember their belief that a couple of millions here or there would hardly be missed in the hundreds of millions of foreign borrowing which must be arranged every week and month, we need not be too hard on them. It was their belief that a few millions would not be missed in such large amounts of borrowing as are still proceeding.

The problem for the Government and for us as a country is that all the expensive horses were let out of the stable before the door was bolted. It is a pity that this new-found realism, which has found so many recent converts in the Cabinet, was not recognised or accepted by them at the time when the budget was being formulated, when the PRSI concessions were being debated, or not debated, by the Government, or even when the Finance Bill was being formulated. It is a tragedy for the country that this new-found realism was not then in evidence. Lest I be misunderstood or, worse, misrepresented, when I speak of realism in this matter of borrowing I want the House to understand what I mean. Without a planned phasing-out of the current budget deficit our capacity to borrow abroad for valid, capital purposes is put at risk. I am not one of those who harbours some puritanical dislike of borrowing for its own sake. I accept that foreign borrowing must remain a feature of our economic development. My only reservation is that the money borrowed is deployed in productive employment-creating investment. That is why I make the point that a planned phasing out of the current budget deficit is vital if we are to maintain our capacity to effect the necessary borrowing for productive investment. It is a pity that the new-found realism of the Cabinet was not evident earlier when it mattered, when it counted. But we must be thankful for small mercies that it may lead to belated action. There is now this perception on the part of Government Ministers of the scale of the crisis in the economy and country. One does not know whether this new-found firmness, this new realism on the part of the Government, this rush of blood to the head, was generated by the Exchequer returns for the first half of this year which showed that the budget deficit for the entire year of £679 million, so proudly announced on 25 March last, was exceeded in this part of the year already by £13 million. It may be that this change of perception on the part of the Government was due to those undisputed figures. Of course it is also just possible that it has finally dawned on at least some of the Members of this Government that the foreign interest payments on government debt this year will be £500 million, or 4.4 per cent approximately of GNP. And it does not matter what speeches one makes at the United Nations, the European Economic Community, what press releases there are in foreign capitals or what Ministers or statesmen one meets, if our economy continues on this course nobody will be around to meet us and we know in whose company we will belong internationally. We will be chief in the banana league if that trend were to continue, and no international posturings would save us from being designated to that kind of company. I repeat £500 million, or 4.4 per cent approximately of GNP, and that estimate is a low one. At least one economist, Dr. Brendan Walsh, puts the figure even higher than that. Therefore these Ministers in this Cabinet, including the Taoiseach, now realise that even on a neutral budget — that is one with no extra taxation, one incorporating no extra expenditure measures and containing favourable exchange rate projections, all of these now highly unlikely — interest payments on foreign debt will more than wipe out the benefits of any possible economic growth in the next five years unless foreign borrowings for current Government expenditure are wound down within a definite, planned time scale.

Recently we have had the warnings from the European Commission. We have had warnings from a highly placed member of the Commission staff who took the trouble of coming to our country and telling us directly what the scale of our problems is. The Commission has warned that unless there is tangible evidence of improvement in both the deficits on public finances and the balance of payments in 1982 and 1983, and I quote, "lenders might grant shorter periods for loan repayments". If that were to happen we would have the following scenario in that debt repayment, a telescoping of the debt repayments, larger payments to be made in a shorter period and central debt payments, would all jump, forcing any Irish Government on the disastrous course of embarking on further taxation.

In a paper presented to a conference of the IFA on 10 June a member of the Commission's Directorate General for Economic and Financial Affairs pointed out that if the massive balance of payments deficits recorded since 1980 are allowed to persist unchecked a devaluation within the EMS may be forced on the country. Despite the improvement projected in this year's balance of payments deficit, I believe that the collapse of the Government's budgetary strategy in the latter half of this year will necessitate further borrowing which, in turn, will drive up interest payments and the outflow of funds from the economy in 1983. That sequence of events points towards devaluation.

I say "collapse of the Government's budgetary strategy in the latter half of this year" because I do not believe that the accelerated VAT payments will be received this year. We must not forget that the state of Government budgetary strategy, the budgetary target towards which the Government are working, relying on over £176 million in accelerated corporation tax and VAT payments and £45 million in revenue buoyancy I believe, will definitely, not become a reality this year. It is common knowledge at the moment that the Revenue Commissioners are having difficulty in collecting normal VAT, PAYE and PRSI payments from many companies. Importers and many companies are in arrear on their existing back payments. The Minister for Finance must know of the large number of businesses presently negotiating with the Revenue Commissioners deferment of their tax dues. I do not believe for a moment that the £140 million essential to achieving Government budgetary targets will be collected this year.

We are still waiting for details of the promised scheme to utilise the Industrial Credit Corporation in on-lending funds to companies which experience difficulties in paying additional VAT in the autumn. It is common knowledge that the Revenue Commissioners will be unable to make rebates to exporters on their raw material purchases until fully six weeks after VAT has been paid on these goods. The effects can be imagined, the adverse effects this will have on firms' capacity at this time of great strain. These facts suggest to me, especially the £36 million accelerated corporation tax, that the Government's budgetary strategy in the latter half of this year must inevitably collapse. Of course the £36 million is part of their budgetary strategy. The other part is the £45 million revenue buoyancy. Again, I contest that it is possible to expect that money to be received this year. No one who has looked at any figures of recent retail sales returns expects these figures to be realised. These twin facts and analysis of what is occurring at the moment incline me to the belief that this difficult budgetary situation will get much worse in the latter half of this year.

There are some who argue that a way out might be found through devaluation. When one talks about that as a way out it is, of course, forgotten that we are vulnerable. Any devaluation of the punt is highlighted by the growing percentage of the public sector debt now held abroad. That exceeds 60 per cent of total debt and interest payments and almost 10 per cent of export earnings. The fact that so high a percentage of our public sector debt is now held abroad should cause those who favour devaluation as a way out to pause. I said there was some agreement now between certain Members of the Government and of the Opposition of a common perception of the scale of economic crisis. But action is another matter. I say, with regret, the Government's conversion has come much too late, their conversion in perception, and one is therefore doubtful of their capacity to confront the economic crisis.

Next month the Department of Finance will be asking spending Departments to submit their Estimates for 1983. Ministers will soon be put to the test in their various Departments. Those of us who have been in Government know exactly the kind of exercise now confronting Ministers in spending Departments. We know the kind of meetings that will be shortly in the offing. Because of the shortfalls I have mentioned — the £176 million plus the £45 million in revenue buoyancy, Government strategy must lead — indeed, will lead — to a current budget deficit now of over £900 million at a conservative estimate and an opening deficit for 1983 of what now can be seen to be at a minimum no less than £1,200 million. If there is this change in perception on the part of the Government one might argue that they have had ample opportunity to demonstrate their conversion on the road to Damascus. That still holds good as they go into these inevitable discussions. The Ministers in the spending Departments will be confronted with the reality of the budget next year with that kind of deficit facing them. Doubts, of course, persist over the Government's strategy. The monetary stance pursued by the Central Bank is bound to continue to be restricted. The high interest rates are bound to continue so long as uncertainty continues about the intentions of the Government — that is, apart from their expressions of recognition of problems in the economy. The existing high interest rates, even though short-term rates are dropping on the Dublin inter-bank market, are unlikely to decline for most borrowers this year for the following reason: Government borrowing for the first six months of this year stood at £1,136 million or 67 per cent of the projected Exchequer borrowing requirement for the entire year. It is almost certain that the EBR will be near to £2 billion for the year as a whole. Last year's borrowing requirement at 16.9 per cent was the It was the highest ever recorded in any EEC country despite the July 1981 budget. Even though our borrowing requirements at 16.9 per cent was the highest ever recorded, and despite our efforts in that July budget to mend the situation, efforts which were greeted with a lack of support on the Opposition benches at that time, even with that effort on our part to take the right direction and deal with the crisis our borrowing requirement of 16.9 per cent was the highest ever recorded in any EEC country.

The crowding out of other borrowers by the Government's own borrowing requirement will be repeated this year and will keep interest rates high in order to control private credit expansion. The current level of interest rates is clearly not conducive to investment, and, therefore, to employment, and is also bad news for mortgage holders who are now facing an unprecedented mortgage rate of almost 18 per cent.

Mention of mortgage holders brings home the reality of high interest rates for ordinary people. The Government who assert their interest in the high price of house mortgages have brought about the high interest rate because nobody, including the Central Bank, attaches any credibility to their budget strategy.

Our exchange rate and interest rates are combining to undermine the one beacon of hope in the present gloom, the performance of industrial exports, which will be up 7 per cent. Our exchange rate and interest rates are serving to undermine that possibility of recovery in the economy. I have already briefly referred to devaluation as a way out. Voices have been raised suggesting that devaluation was a remedy that would maintain our competitiveness in the export market, or, indeed, on the home market. My belief is that any devaluation would offer only temporary respite. That route offers no automatic solution to our economic difficulties however attractive the short term possibilities might be. The option of devaluation would not absolve the Government from the task of winding down our foreign borrowing. Rather, it would make it absolutely essential to retain the beneficial effects on exporting companies' costs. Without firm and resolute Government, the danger must be that spiralling inflation would result from a devaluation at this point. Furthermore, interest rates would rise even further in such a situation. The onus is now squarely on the Government to indicate the taxation and expenditure measures it will take to avoid a forced devaluation of the currency. I hope we have now got past the nonsense of contrasting gloom and doom with bloom and boom and we are now at the reality of what we will do about what is accepted by all as a crisis in our economy.

I should now like to examine the areas where there is little consensus between us, the Labour Party and the Government. I am referring, of course, to the means chosen to confront not only the financial crisis but also the human crisis which accompanies it, an inevitable accompaniment. One may ask what do such things as exchange rates and interest rates matter to ordinary people, but they are of concern to them because we have a high unemployment rate accompanying those high interest rates which militate against extra employment and the borrowings of the Government eat up productive investment. We differ from the Government in that they appear to be standing idly by, as a former leader of Fianna Fáil said in another crisis, when it comes to dealing with the human crisis of unemployment as reflected in the record 151,000 unemployment we are now experiencing. By a series of hints and leaks we can begin to picture what appears to be the evolving Government strategy for dealing with the mess they are now in. Public services are to be cut, in a way as yet unspecified. Public service numbers are to be reduced, in a way yet unspecified. It is ironic that that will be done by a Government who between 1977 and 1981 caused the greatest expansion in the public service. Public service pay rates are to be moderated but not frozen.

It is difficult to see how a basic agreement governing incomes either in the public or private sectors can be secured given the effects of the Government's mismanagement of the economy. The Government's action will make agreement in this area difficult to obtain.

On taxation the Commission on Taxation proposals will doubtless get a thorough airing. The Government have already signalled that the level of taxation has reached the maximum that will be tolerated by the public. If the Government are referring to the tax taken from PAYE, I fully agree. However, total silence is the response so far on the need to increase capital taxation. What appears to be emerging is a fairly crude approach to public expenditure cuts. Housing, health and social welfare are areas where cuts are to take place.

In the debate on the no confidence motion in the Government I questioned the seriousness of the Government's commitment to planning in terms of their unwillingness to accept that their own actions must give some indication that they are consistent with a planned approach to the economy. The Government's plan, which we are all awaiting anxiously, will be given serious consideration by my party, even though we are sceptical at present of their capacity to deliver on their own contribution to the effective operation of such a plan. The Minister for Education in the debate on 1 July chided the previous Government for not bringing in a plan in the eight months we were in office.

He forgets that we correctly attempted — it is recognised we largely succeeded — in bringing a planned approach to Government expenditure which was in a state of chaos prior to our taking office. Before a Government starts planning an economy, they have to place their own expenditure and revenue on a planned course. That was our approach. Any plan sets out objectives or aims, the means of achieving them and the constraints or parameters on their achievement. It is the task of a Government to try to create the necessary consensus required to implement such a plan. The evidence to date is that the Government have not earned the respect of the people so that they can seek the necessary sacrifices that must be made by all if the economic and financial crisis is to be seriously tackled.

In the crucial area of taxation policy, the Government have persisted in reacting to protests over PAYE and PRSI with piecemeal reforms. However, now that the Report of the Commission on Taxation is available to the Government the time has come for a comprehensive approach to tax reform. The Coalition Government did not wait for the Commission's report because we believed in getting on with the job. With the benefit of hindsight the Government may well regret their abandoning a tax credit system. It would have enabled them to make their PRSI concessions at approximately half the £45 million it will now cost. But, most important, it would have provided a much fairer administrative mechanism for adjusting the burden of taxation at various income levels.

The Commission on Taxation are reported in the newspapers to have recommended an expenditure tax or sur-tax above a certain level, with a standard rate of income tax for all taxpayers. Whatever taxation system is decided on some of the glaring inequities and anomalies in the present system should not be carried over into the new system. The Government's own amendments to the March budget indicated precious little movement towards genuine reform. Interest relief for new mortgage holders on the higher tax rates was restored. Such a move has wider implications for the allocation of resources in housebuilding, or rather it restored an incentive to perpetuate the present system which misallocates resources in favour of the more expensive dwelling.

As far as I am concerned, there are a few simple realities that need to be encompassed in any taxation reform: the burden of tax on the PAYE sector must not be increased; the lower paid must have an incentive to work; the tax base must be widened and the combined yield from all forms of capital taxation should be progressively raised to at least 1 per cent of GNP.

In the time at my disposal I have concentrated on the economic side. Most of my experience in Government has been on the economic side. What concerns most people is their ability to live in this economy and their future security. It is on economic strategy and wisdom that the Government will be judged by the people. Whether this Government have the will to govern throughout the next three or four years remains to be seen. So far all the evidence, judging the Government in an unbiased way, is that they have not. If the Government want to hang on to office simply for the purpose of governing, they will have this side of the House to reckon with.

Mr. Sherlock

This debate takes place today under the darkening shadow of mass unemployment. With more than 150,000 officially unemployed and the real total probably nearer 200,000, none can seriously deny that this is the most serious political and social problem facing Irish democracy today. Yet what have this Government, or their predecessors, done to solve it? Sweet damn all.

Radical new proposals are needed to tackle this problem, but even within the existing system there is a lamentable failure to exploit resources to the full when it comes to job creation.

New jobs could be created very quickly if a liaison system could be established between the Departments of Social Welfare, the Environment, Labour, and AnCO. A task force based on these bodies could develop public work schemes which could at least take the sharp edge off the experience of starting life on the dole — the grim spectre now facing so many of our young people. There is plenty of work for young people to do in our cities and in our towns.

Surely it would be better to have them carrying out badly needed work on community services and infrastructural development than simply drawing dole. These young people want to work, and there is no more soul-destroying experience than to be unemployed and facing the prospect, in a few years, of becoming unemployable through no fault of their own.

This is no exaggeration. Of more than 50,000 young people currently unemployed the new Youth Employment Agency estimate that 20,000 could go through life without ever having a job.

With such a daunting prospect before us I do not intend to launch into a party point-scoring exercise on what might have been if politicians on both sides of the House had grappled more seriously with this problem in the past. I want to emphasise, with all the force at my command, the need to tackle this problem in a new way. We must inject hope into our young people. We must convince them that they have a future in this country, and that can only be done if we show them we are prepared to tackle the unemployment problem on a bigger and better scale than ever before.

The Government have an opportunity to meet this challenge in their new economic development plan. The Workers' Party urgently hope that they will have the courage to seize that opportunity. Such a plan must, of course and will win widespread acceptance if it is to succeed. And it must also commit the Government to invest in wealth generating economic activities.

Too often in the past money has been invested haphazardly, or in providing a carrot for private industry which has singularly failed to bite. Alternatively, Governments have sought to create jobs in the public sector which have simply swelled the ranks of the civil service. What we need is Government investment that will create productive jobs in both the public and private sectors. They will generate the wealth not alone to repay debts incurred in financing new job creation but the extra funds needed to create yet more jobs.

Such a strategy must be firmly based on our natural resources. We have a rich country, but we are singularly failing to utilise its wealth in the interests of the people. Every year, for instance, we export 350,000 tonnes of lead and zinc ore from the Navan Mines. This ore is going to create jobs in smelters all over Europe, but none in Ireland itself. We are still waiting for the zinc smelter promised in the 1977 election campaign, and the countless downstream industry jobs this would generate. At present the only employment generated by the export of this valuable mineral resource is fewer than two dozen jobs in Dublin port.

If we do not act soon in this area we shall end up with nothing to show except a huge hole in the ground, as happened at Gortdrum.

Fortunately, most of our natural resources are renewable ones. It is estimated that at least 23,000 extra jobs could be created in food processing alone if we were utilising our agricultural wealth efficiently. At present the vast bulk of our cattle are exported live and, even when animals are slaughtered at home, many of the valuable by-products are also exported to provide jobs abroad. How many jobs in the leather industry could have been saved if Irish firms had been able to buy Irish hides at competitive prices at home instead of having to re-import them, ready treated, from Britain?

A similar situation exists with the sheep industry. Raw wool from Ireland is exported untreated and has to be reimported by textile firms. In our party publication, the Irish industrial revolution, it is estimated that more than 4,000 jobs could be created from these sources by 1986. An even more glaring failure in national economic planning was exposed by my colleague, Deputy De Rossa, last week when he spoke on the fishery Estimate. On that occasion Deputy De Rossa pointed out the tremendous job opportunities that existed in the fish farming area — if the recommendations of the National Board of Science and Technology in this area in a recent report are accepted. Figures cited by the NBST show that 20,000 tonnes of fish farmed-salmon will be produced by the Norwegians each year by the end of the eighties while in Ireland we are not producing 20 tonnes.

It is this type of imaginative approach and the initiative which are needed if we are to face the jobs crisis, the biggest social crisis Ireland has faced since the Famine. As a party committed to the attainment of full employment, the Workers' Party believes that employment could be increased by over 300,000 before the end of the decade if an integrated national economic plan was developed along the lines I have indicated. Of course such a plan requires money and, some will argue, we have borrowed enough already. A fact which must be confronted by this Government — and every Deputy in the House — is that there is no shortage of money in this country; it is the political will to use it in the public interest which is in short supply.

No economic plan that is worthy of the name can ignore the need to control the lending policies and interest rates of the commercial banks. Earlier in this session we saw a host of semi-State companies, many of them with fine records of contributing to the Irish economy, such as the Irish Sugar Company, Irish Shipping, Irish Steel and B & I, being given expanded share capital allocations by the Government.

This, in itself, was a policy welcomed by my own party. But, having recognised the fact that these semi-State bodies were undercapitalised, the Government then performed a double-think and told them to borrow for their immediate needs. What we are doing is driving these enterprises into the arms of the bankers and surely one thing we can all agree on in this House is that the bankers already have far too strong a grip on all sectors of the economy — and that applies as much to farmers, to urban mortgage holders, to private industry as to semi-State enterprises.

The time has come when the Government must assert its authority over the banks rather than allow the banks to dictate economic policy to the Government. Indeed my party would go further, and argue that the Government, in its new economic plan, should enter the banking arena itself by allowing the Post Office, or its successor, An Bord Post, to set up a national giro service. Such a service would open up new investment funds for the Government and also help the small investor. What better way is there to finance economic growth and, at the same time, cut out the banking middleman with his exorbitant interest rip-offs?

But the creation of this new wealth is not simply an end in itself. For too long the privileged few in Ireland have exploited scarce resources for their own benefit. Any new economic plan must show that the efforts and sacrifices of Irish workers will be rewarded with better living standards and better social welfare and health facilities for the sick, and those on low incomes.

This very evening saw hundreds of workers from a very long established firm here who had a monopoly in a particular business — I refer to Roadstone workers — marching to the gates of Leinster House criticising the company for its redundancy policy and its foreign investment plan; because the wealth being created by the sweat of these workers was being invested by the company in foreign investment. Workers are very keen to see that management structures are correct and that management will do its business in a manner which will give the incentive to workers on the factory floor. Such is not the case here. The record of management is very bad. People who are critical of workers have failed to examine the problems that exist in various areas. I will be blunt and say that the expenditure of finance by such companies to provide staff cars for managers of all descriptions while workers are being asked to take a cut in their living standards has to stop. This is the kind of situation that has to be rectified, and the Government should take note of it and give the message loud and clear to those people who have got Government subventions to utilise it in the best interests of industry and its workers, because very often it is not being so used.

Earlier this session, my party put down a detailed motion calling for a radical overhaul of the PRSI system. While seeking to introduce a lower basic rate of PRSI with built-in tax reliefs for the lower paid, we also sought to remove the ceiling on contributions from the higher paid as an unfair anomaly in any social insurance scheme. Under our proposals we believe that, for the first time in the history of this State, it could become possible to provide comprehensive medical care services for all, regardless of income.

There is a deplorable situation here where people who are paying high amounts in taxation and PRSI contributions have absolutely nothing to gain from them. The number of people who cannot qualify for full eligibility for health services is alarming. If we had comprehensive medical care services for all it would remove forever the nagging problem of eligibility levels for families needing medical attention. At the moment we have the ludicrous situation where it is sometimes better for a person to go to hospital for treatment rather than try and meet the cost of medical bills in the home.

People in need of drugs or medical treatment should never be confronted with those sorts of choices. The spectre of a family losing its medical card because one of the breadwinners has received a rise which may push them into a higher income bracket should be removed. It is a petty means test procedure which costs as much to administer as it seeks to save in health expenditure.

Our party are also seeking to bring other changes in Irish life. The long-festering sore of ground rents needs to be lanced from the body politic once and for all. In our Landlord and Tenant (Ground Rents) Bill which we hope to introduce after the recess, we are seeking to abolish ground rents on tens of thousands of urban homes.

Debate adjourned.