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Dáil Éireann debate -
Thursday, 28 Oct 1982

Vol. 338 No. 2

National Economic Plan: Motion (Resumed).

The following Motion was moved by the Taoiseach on Wednesday, 27 October 1982:
That Dáil Éireann takes note of the Government White PaperThe Way Forward.
Debate resumed on amendment No. 1:
To add to the motion the following:—
"and rejects the conclusions reached in that document as an inadequate and ineffective response to the grave problems facing the country"
—(Deputy J. Bruton).

Last evening I spoke for a few minutes after Deputy Bruton's interesting and constructive contribution. The first point I made was that I thought it indefensible that the Dáil should have remained in recess until the end of October at a time of economic crisis. As the House is aware, our country faces a quite unparalleled crisis of depleted Exchequer finances and of unemployment which is in the range of 168,000 people, 31,000 of whom are under the age of 25 years. There is political paralysis in the administration of our economic affairs because of a minority Government who are not certain from one day to the next whether they can command the support of the House to pursue a policy of economic management. In that situation there is a grave danger that the solutions necessary to resolve the crisis will be further postponed as happened in 1980, 1981 and for the most part in 1982. The result will be that the crisis will be more prolonged and intractable in 1983.

I hold the view that the Labour Party have a quite different approach from that of the other political parties in the Dáil with regard to the economic crisis. The document produced by Fianna Fáil is very strong in well-written phrases and is well produced in terms of analysis of the budgetary problems facing the country but it is not a plan. It is a programme which does not hang together with regard to output figures, export projections and Exchequer financing. Despite the assurances given by the Taoiseach yesterday that there had been extensive consultations with the ESRI, with the Central Bank and with the Commission with regard to the budget deficit, I do not accept that informed economic opinion here agrees with the basic analysis. Once again in his anxiety to be all things to all men on economic issues, the Taoiseach has fallen into the trap of taking out the difficult parts and leaving us with a programme that does not hang together. That is the basic deficiency in the document and I will deal with that matter in detail later.

On the Fine Gael side there is an excessive preoccupation with budgetary stringency without a balanced reflection on the taxation side and the need to balance taxation revenue so that we can maintain essential public and social services. The document produced by that party has some good things such as proposals regarding a reduction in the PRSI rates but they are more clearly related to the prospect of an early general election than to reality so far as income tax and PRSI contributions are concerned. Despite many excellent items in the Fine Gael programme for economic recovery it has that basic deficiency particularly with regard to taxation and on the need for the maintenance and development of taxation to pay for essential public and social services. These matters are absent from the document although I agree it is a fair and reasonable presentation of many other aspects.

The Labour Party's approach is quite different. We maintain we must provide Exchequer resources to meet the needs of the unemployed and of school leavers. We say we must provide Exchequer resources to maintain essential public and social services and, above all, to develop prospects for the creation and maintenance of jobs. In that way we are different in our approach to this matter.

At the moment I will refrain from commenting on The Workers' Party plan but I will do so later on. It is alleged to be an output plan but it does not face reality and does not stand up. It is a combination of different observations by different sections of the party and it does not knit together. I will give one example of what that plan states:

Over the next three to four years, however, we recognise that it will be necessary to devote the planned increase in national output to the reduction of the foreign debt of the State. This means that the extra money from increased foreign exchange earnings cannot be used to expand employment in those sectors to meet the social needs of the country, such as health services, education, urban environment and housing.

In other words, no money will be available. Yet, the plan goes on to indicate among other things that we will have a national health service with medical cards for everyone, free hospital service for the entire population and an extra 7,500 teachers. There is not the slightest indication in the plan where the money will come from other than from what they call "output". Despite many reasonable and fair observations in the plan it does not hang together. I am very critical of documents produced by political parties, where different spokesmen put in their own contributions with regard to health, electronics, agriculture and forestry and then call it a plan. That is not so. It is just a series of chapters which do not relate to one another. This is what happened in relation to the famous investment plan. I remember when the Department of Finance produced an investment plan for Fianna Fáil. They did a very good investment side and compiled a really excellent contribution with regard to taxation and the disciplines required to have the money for investment. However, Deputy Haughey put in the material relating to investment but he left out all the data regarding the disciplines required so far as taxation was concerned. He called it an investment plan but, of course, it was not such a plan. It was totally inadequate.

In view of the unprecedented character of the economic crisis facing this country today we must welcome, and I warmly welcome, the fact that the political parties are producing economic documents and what they call plans or programmes. This is the first time I can recall the different political parties almost simultaneously producing economic and social policy documents of a general nature, however inadequate their plans may appear to be. Unfortunately, most parties produce plans and programmes and then leave them there thinking that merely producing the document will solve the problem, but needless to remark a great deal more has to be done.

The alternative proposals which I intend to put before the House on behalf of the Labour Party are, we maintain, responsible, constant and capable of implementation. Our first priority is maintaining competitiveness in the Irish manufacturing and export industries. Everything else pales into insignificance. There is a direct link — and any political party who did not acknowledge it should return to their economic textbooks — between inflation and job losses. There is no doubt that a lack of competitiveness, even in a recessionary climate, has led to redundancies and factory closures. The lack of competitiveness has hit large sections of the agricultural and food processing industries. We have to rectify that situation first and the sooner we do so the better.

While a great deal of our inflation is imported, too much has been domestically created by direct Government action and by inappropriate approaches to incomes policies. There is no doubt in my mind that our actions often fuel inflation and add to existing costs. Lack of competitiveness, and inflation which is the worst in western Europe at this stage, have been the product of social and political attitudes here. These attitudes have come from the Fianna Fáil Party. That may seem a very sweeping statement but from 1976 onwards, when the famous manifesto began to take shape, there was what one might call Fianna Fáil inflation generated by the deliberate social stimulation of unreal expectations among many sections of our society.

People may say I am harking back too far, but everyone knows that in economic affairs five years is the minimum period in which one can do any kind of reversal of general economic policy, and that it takes at least five years to recover from that kind of approach. Only now in 1982, is the problem, which is virtually at an intractable stage, being recognised. There must be a long-term planned approach to incomes policy based on permanent consultation between the Government and the employers, the unions and the farmers' organisations.

That is why I was appalled at the Government's deliberate abrogation of the public service pay agreement. That was a retrograde decision because while it may help the opening budget deficit for 1983, it undermines and corrodes basic confidence between the trade union movement and the Government and could result in there being no national wage agreement for 1983-84, leaving a residue of distrust in its wake. I believe the national understandings represented the first step towards a comprehensive approach in which all aspects of the incomes question could be tackled in the context of overall national development. I regret that in the Fianna Fáil programme, the Fine Gael document and the other documents available, there is no reference to the prospect of further national economic and social understandings. Rather there is an unrealistic figure stating what the likelihood might be of wage increases in 1983 to 1986. That is a basic inadequacy in those documents.

I regret that the Government's economic strategy is in ruins. I would like to know where the Government's document was printed. It does not seem to have a Cahill's or other Government printing code on it. I would like the Minister of State to tell me how much it cost because we are all very preoccupied with costs. The publication of this new programme does not deny the fact that the Government strategy is in ruins. I submit that any pretence at planning or management of the economy has been abandoned in favour of what can only regrettably be called public relations and political survival at any cost. My biggest problem at present is with credibility about this plan being implemented in any way. I do not believe, despite the Taoiseach's vehement protestations, that he is going to implement it. The process of budgeting official estimates of receipts and expenditure has been brought into permanent and damaging disrepute. I hold that view very passionately. If I did not, I would not waste the time of this House saying it.

Perhaps the Taoiseach in many ways has been maligned because from 1977 to 1980 one would imagine he was the lone author of all the misfortunes which befell the country arising from the famous manifesto. He was not. There were other people around and they, too, must accept their responsibility. But certainly from 1980-81 he was exclusively and utterly responsible.

In apportioning responsibility for the sorry mess in which we find ourselves today I can go back to 1979 when the then Taoiseach, Deputy Jack Lynch, said in an Adjournment debate that their policy of recruiting 12,000 civil servants would be fully implemented by the end of the year and that the last 4,500 were at that time being recruited. Admittedly Deputy Haughey was probably in Inishvickillaune but there were other Ministers in office who cannot be wholly excused. However, there is no doubt that the responsibility during 1980-81 rested exclusively on the shoulders of Deputy Haughey.

The tragedy is that economic growth has collapsed and scarce Exchequer resources which should have been conserved in 1979-81 to offset the worst effects of the recession have been frittered away and we are now faced with a programme from the Government which is not capable of being implemented. It has no prospect of actual success and there is not a single economist of repute who would hold out any hope that it can be implemented in the immediate future. We will be doing well if we achieve a growth rate of 1 per cent in 1983 and that is a measure of the gravity of our economic problems. Ours is an economy which would require a growth rate of at least 4 per cent per annum if we were to have any hope of reducing unemployment significantly and providing adequate resources for essential investment and public services. I strongly submit that the momentum of growth promised has been lost not just because of the world recession or because of high interest rates during the past three years but also because of substantial mismanagement and misdirection of resources by the Fianna Fáil Party. It is a measure of the crazy priorities we have had in recent times.

There must be a change but I am not sure that the Taoiseach can bring about that change. It has been strongly suggested by the Taoiseach that the key features of the economic plan are sustainable. I do not accept his view, any more than I accepted his apologia in successive election campaigns. During the general election campaign in June 1981 the Taoiseach maintained that the country's finances were in good order, that there was a great prospect of growth towards the end of 1981 and that the incoming budget prospects were quite rosy. When we introduced our budget in July 1981 Deputy Haughey maintained that there was no need for such a budget and that it should never have been introduced. He said of our January 1982 budget that it was wildly excessive and unnecessary, that there was no cause for concern, that the overall Exchequer situation could be put right without any great sacrifice and without any problems developing.

Then in March 1982 we got a new budget. The Taoiseach dominated the Minister for Finance to a degree which was unprecedented in the history of the State. I submit that as far back as April 1981 he had absolute awareness of the situation, prior to going to the country. There was a working group on future budget policy in the Department of Finance. They produced a document dated 7 April 1981 which I received when I went to the Department of Finance. The document states as follows:

The essence of Government policy is the achievement of sustainable economic growth adequate to provide employment for an expanding labour force and to generate resources for social development. This requires a positive development programme focused on investment in the productive areas of the economy and a phased and disciplined reduction in the current deficit. The 1981 budget is based on this policy. The budget targets have been set to support a record investment programme, with expenditure in the Public Capital Programme rising by 36 per cent, while provision is made for a modest cutback — from £547 million to £515 million — in the current deficit. Overall Exchequer borrowing is projected to be reduced from the 1980 figure of 14.5 per cent of GNP to 13 per cent of GNP this year.

That was the view of the Department of Finance of what the 1981 budget postulated. That budget was announced in January 1981 and the report was produced in early April of that year. It states further:

Foreign borrowing in 1981 is likely to raise the Exchequer foreign debt to £3,000 million. Our credit standing abroad is good at present but because of the rapidly rising level of our debt, there can be no guarantee that the £800 million or so in foreign borrowing required this year can be obtained on the same terms as have applied to loans negotiated up to now.

Under the heading "Difficulty of Achieving the 1981 Budget" the document states:

If there is a substantial deviation from the 1981 budget arithmetic or if there is a substantial carryover of commitment from 1981 to 1982, then the conclusion in the report will need to be revised.

This is really significant:

The experience of 1980 in particular, when supplementary estimates of expenditure, totalling more than £250 million, were required, has raised queries in the Dáil and elsewhere as to the ability of Government to live within the budget limits that have been set for this year.

That is a very clear internal observation. We must remember that this document was available to the Government, to the Minister for Finance, and to the Taoiseach who said everything in the garden was rosy. The document went on:

Generally it would be hoped to realise the revenue targets in the current budget, on the basis of the underlying economic assumptions. The same cannot be said of the current expenditure figures. These add up to an increase of 14 per cent on the 1980 outturn. The increase in the pay figures is 18 per cent and the non-pay figures 11 per cent. The non-pay expenditure allocations generally will not match inflation and the reality is that they will be exceeded substantially if the decisions already taken to exercise restraint are not matched by practical measures to enforce these decisions.

This gives the lie — and I use the word "lie" deliberately — to what was suggested time and again by the Taoiseach, that there was slippage, nobody knew, everything in the garden would be rosy. This notion was perpetuated right through the election campaign of May-June 1981. In television performance after television performance, in speech after speech at the cross-roads, the Government were happy with the way things were going, when they knew, and had a report before them, that everything was totally different. That is way I do not believe in The Way Forward. I cannot believe anything any longer. The document went on to say:

The consequences of these developments on pay and non-pay expenditure, if they are not counteracted, will be substantial supplementary estimates in the latter half of 1981 which will increase the budget deficit and defeat the policy of reducing reliance on borrowing. It will also destroy confidence in the determination of Government to put more order into the public finances, and will be directly contrary to the approach proposed in this report.

These are selective quotations of necessity. There is a limit to what one can disclose. When I went into the Department of Finance in a junior capacity I sought all the available information within the Department to satisfy myself as to who was telling the truth. I was quite horrified at the kind of information available.

That brings us to the 1982 budget. This is all very germane to the 1982-1986 situation in the context of this plan. We have the massive overshoot in the current budget deficit which was predicted clearly by all the commentators as far back as last March. Only the Taoiseach seems surprised. I stated as far back as budget day in March that the outturn of the budget provisions would result most likely in a deficit in current account of at least £900 million because of the determination to implement a whole litany of election and by-election promises and deals of all shapes and sizes in virtually every constituency, ranging through the Gregory deal, the Blaney deal, the Dublin west deal, the Whitegate deal, the Clondalkin deal, the Talbot one, the Beaumont Hospital deal — £65 million on that one — and the decentralisation deals. They are all evident. That is why we will finish up with an accumulated deficit of £920 million projected for the end of the year.

The most decisive factor in the 1977, 1981 and 1982 general elections was the cash hand-out promises made by the political parties in those election campaigns. The most culpable and most blameworthy were undoubtedly on the Fianna Fáil side. The Fine Gael promises in the 1981 election were equally wrong and unsustainable. The Labour Party were in Government with the Fine Gael Party and they stopped them from being implemented. There was the famous massive tax credit operation and there were the other arrangements for which a figure of £460 million loss in revenue came up in the Department of Finance on an initial checking. The plan was as expensive as that. For the most part it was scrapped and, in the heel of the hunt, loss of revenue to the Exchequer would probably have been no more than £30 million or £40 million. The Fine Gael tax package which won that party a substantial number of votes in the 1981 election was not sustainable and was accepted as such by the Fine Gael party in office.

I have a copy of the Labour Party's 1981 election programme. I remember the leader of the Party, Deputy Cluskey, throwing his eyes to heaven when pressures were brought to bear on him to make some concessionary promises in the election campaign. He would not. He is a very obdurate and difficult man when he believes he is right, and he was right. He was quite correct in not making any soft option promises. A great deal of money necessary for social, health and education services, for employment maintenance and creation was squandered in the quest for political power from 1977 to 1981.

How do we get out of the grip of that situation? We will not get out of it by saying to the Irish people: "We will plan a programme. We will implement the Telesis Report. We will implement sections of the McKinsey Report and sections of the report by the Commission on Income Taxation. There will be no problem. It will all work out in the end." That has been the classic approach of the Taoiseach in particular. When Brian Farrell interviewed him on television on The Way Forward that was a very interesting interview. He said the situation was very difficult and we must get to grips with it. When the interviewer asked did this not involve sacrifices he said it would all work out, there would be no drop in standards of living and that nobody would have to pay very much for it. It was the same old story.

I want to come back to the question of taxation. Any plan or programme which deliberately ignores and casts aside issues relating to taxation is not dealing with reality in terms of future economic and social development. At the moment in western Europe and in this country there is great anti-taxation feeling, great anti-public expenditure feeling, great anti-welfare feeling which is reprehensible because if this manifestation of what is in fact, we well know, 19th century economic philosophy prevails we might as well dismantle the economic superstructure and the budget and all go home and leave it to chance. In any modern economy it is expected, and citizens have the right to expect, that the Government will provide a wide range of services to the community, including nealth, education, housing for those in need, environmental services, social welfare services and so on. Over the past 20 to 30 years the range and extent of those services have increased greatly and continue to do so even today in all OECD countries. Thus in 1965 total public expenditure, current and capital, amounted to 37.9 per cent of gross domestic product and today the percentage is up to 67.1.

I want to advance a philosophy which is totally different from that contained in The Way Forward and which to an extent is implicit in the Fine Gael document and virtually absent from The Workers' Party one. The policy objective of our party is a further proportionate actual increase of public expenditure which is necessary to remove the many inequalities in the present system. If we are to have the best standards of health care available in all parts of the country to all those who need those services, if we are to have a greater emphasis on, for example, preventative medicine, which we should have, if we are to have a greater emphasis on community health programmes, which we should have, if we are to open up second level education to all those to whom it is currently denied, if we are to open up third level education to all those social classes and income groups who are currently denied third level education, if we are to house the homeless in our community, and if we are to provide basic adequate support on a family income basis to those who have no work or who are without adequate income, and furthermore if we are to extend our policy along lines which would be quite appropriate to give selective assistance to both agriculture and industry, then there is only one way we can do it, namely, devote a greater proportion of GDP to public expenditure.

It will be argued that this runs contrary to all concurrent conventional thinking. It does not. The only thing that has been wrong with the way we have been going about it is that we have financed our public expenditure by an excessive reliance on borrowing, domestic and foreign. That has been the problem. We have ignored the fact that there are two sources of funds for public expenditure, taxation and borrowing. Borrowing, while it has an important role in the development of any economy, particularly capital programme borrowing, provided it is invested on a productive basis, is nevertheless an expensive way of funding public expenditure particularly when interest rates are high. I concede readily that that is so and that borrowing often merely defers the problem of financing public expenditure from one year on to the next. However, it should be possible to learn from experience over the past five years and to have a proper, reasonable balance in the budget and in the Government's programme from now to 1986 between borrowing and taxation. So far it has been all borrowing and Governments, with the notable exception of the Government of which I was a junior Minister for 8 months, have been relying almost exclusively on the borrowing prospect. In Ireland annual interest payments on public sector borrowing were 13.9 per cent of total tax revenue in 1965-66 while by 1981, 24 per cent or nearly one quarter of total tax revenue had to be used merely to pay the interest on early borrowing. Therefore, there are sharp and absolute limitations at this stage on the borrowing side.

However, given the crisis over public borrowing, to get the commitment of my party to maintain and, it is to be hoped, increase the level of services provided by the Government, it is quite clear that taxation is the only other major source of funds available for public expenditure. There is considerable dissatisfaction already about the current levels of many forms of taxation and it is being argued that there is little scope for increasing taxation. On this point it is useful to compare levels of taxation in Ireland with those in other countries. If we look at the revenue statistics of OECD member countries for 1981, we find that the levels of personal income tax, social security contributions and corporate income taxes in Ireland as a percentage of GDP are below the average of all OECD countries and most European countries, while taxes on goods and services and on property as a percentage of GDP are higher than the OECD average. Nevertheless, total tax as a percentage of GDP is slightly lower in Ireland than the OECD average. International comparisons of this sort must be treated with great caution since each country is unique and income levels and social and taxation structures vary widely. Nevertheless, it is reasonable to conclude that Ireland has not reached the limit in terms of taxation levels except perhaps for indirect taxation where I think it has reached the limits compared with most other countries.

The crux of the matter is the structure and the equity of our taxation system and the other objectives, apart from revenue raising, such as the redistribution of income, incentives towards different policy objectives and so on. Our present taxation system has developed in a most haphazard way, with new taxes being introduced separately with no regard for the overall pattern, with numerous exemptions, with special cases being provided for, with various small pressure groups having their own tax inch — sometimes for valid reasons, sometimes merely for short political gains or special pleadings, or simply because of reactions within the system to various pressure groups.

Our entire tax system has for years provided a happy hunting ground for tax avoidance and evasion. It is, therefore, of considerable importance that the Government as a matter of absolute urgency should look at the entire tax structure. It is necessary to maintain and increase total revenue, otherwise basic social services and public services will be dramatically curtailed. In that context I am concerned about a number of aspects of the report on the Commission on Taxation. My greatest concern this morning is the virtual absence from the Fianna Fáil document The Way Forward, of any indication of the future taxation profile of the Government between now and 1986. All the Government say, in an indefinable way, is that they will provide relief of about £100 million for PAYE and, between capital taxes and VAT, an increased yield of £400 million. Beyond that meaningless statement there is absolutely no projection of PAYE or VAT yields up to 1986. That could have been done, but was not. There is no indication of any kind of profile of taxation which any plan normally would convey and which the Department of Finance could project, if requested, in a coherent and responsible way. There is no response at all to the Report of the Commission on Taxation. I readily concede that it would be impossible in the short period of preparation of this plan for the Government to respond in detail to this report, but there is no response at all. I did not expect any response.

My basic point on behalf of the Labour Party is that in a recessionary period I do not accept that this House should yield to the popular notions of anti-social welfare, anti-public expenditure and anti-taxation and dismantle our social and economic structure because of these highly negative social pressures in our community. In a recession the burden of unemployment and of falling real incomes invariably bears hardest on low income families, on unskilled workers, on those without property and those who have not had an opportunity in their lifetime of accumulating any savings — therefore on a particular segment of the community. If we use our tax system effectively it can be a major redistributive force in our society and a key feature of social policy, eliminating a great deal of inequality and poverty. That is why I welcome the comments made by Peter Bacon of the Economic and Social Research Institute with reference to two taxes. He suggested, and I share his view, that consideration be given to the question of property taxes, about which there is nothing particularly new. In the Sunday Independent of 17 October he said:

Property taxes could be used to expand the tax base. Recent studies have estimated that a comprehensive property tax of one to 1½ per cent could raise some £250 million. To save on administration costs, self-evaluation might be used, with incentives not to undervalue. Net yield from this tax could be £140,000,000 assuming existing rates were abolished.

I also share his view that there should be a system of taxation of imputed income of houseowners and that this would work on the estimation of a notional rent on a house similar to the pre-1969 taxation of imputed income from land. Such a scheme affecting house owner-occupiers could yield £20 million to £40 million in income tax. I further agree with his comment that there should be taxation on gains from land rezoning. He maintained that the total gains could yield £30 million to £50 million annual tax if we had an effective taxation system derived from a special capital gains tax. All those areas of taxation could be substantially developed here. I state very strenuously that there is absolutely no way to obtain economic recovery based only on value-added tax, customs duties, excise duties and miniscule capital taxation. The outcome of that policy is a massive reduction in basic public services and social services.

There should be a greater interaction between the Government and the Central Bank on the monetary policy side. As at present constituted the Central Bank cannot effectively fulfil its obligations as the central statutory agency for implementing monetary policy and regulating and controlling our financial institutions. At the moment the Labour Party have a Land Bill on the Order Paper and are only entitled to one Private Member's Bill, but we intend to move, in due course, a Private Member's Bill to remove the nominees of the commercial banks from the board of the Central Bank, thus enlarging the independent authority of the bank. It is also our intention to ensure that exemptions given to the banking system under the Restrictive Practices Act of 1972, the Mergers, Take-overs and Monopolies (Control) Act, 1978, and the Prices Acts of 1958, 1965 and 1972 be abolished. There is no effective interaction on economic policy between the Central Bank and the Government of the day. They treat one another very much at a third or fourth remove. I share the view that there is a need for greater governmental public influence over the financial system as a whole, that there is a need to ensure that the banking system and the other financial institutions are brought more closely under the general supervision of governmental policies wherever that is necessary for the achievement of economic and social objectives. This has been done successfully in France and in Austria, for instance, as well as in Italy — though that may not be the best example — as well as in many other European countries. In these places there is a very close interaction between the central federal banks and the government of the day. That does not seem to be the situation here. Again, I would cite Germany as another example of where there is much more systematic influence on the part of the State in so far as the banking and credit sectors of the economy are concerned. That sort of reform is much needed here.

Perhaps my greatest disappointment with the plan is the omission of any structural governmental planning. There is no provision for a national economic and social planning board. What happens here is that when problems arise they are hived off to the NESC, to consultants or to inter-departmental committees instead of being dealt with at central government level. The NESC in their report express concern about the spread of responsibility between Government Departments and their associated bodies, a situation which the council maintain reduces the capacity for a unified approach to the formulation and implementation of industrial policy. I share also the view expressed by the council that the functions related to industrial development should be arranged in such a way as to ensure that the main thrust of industrial policy is focused clearly on the priority issues referred to in the previous sections of their report. The council recommend a review of the co-ordination between the Departments with the objective of ensuring that the primary responsibility for industrial development policy is clearly assigned.

One of the appalling inadequacies of our governmental system is the diffusion of responsibility for industrial development as between various Government Departments. When I was in Finance we had the Industrial Credit Corporation, Fóir Teoranta and the ACC. We were happy with our lot and looked after them quite well, but then there were another lot on some distant horizon — the Department of the Gaeltacht. They were looking after Údarás na Gaeltachta, though no one knew from one end of the year to the other what they were up to. At the same time there were the IDA, a massive body with a staff of 800 developing industry and services with a Minister supposedly in charge, though it would take a Minister working full time to look after that body whereas the Minister concerned has responsibility also for such bodies as the IIRS, a critically important body with a substantial budget, and also the Irish Productivity Centre, SFADCo and the Irish Goods Council. In addition he has responsibility for the Kilkenny Design Workshop and the new National Enterprise Agency. He also has his functions as a member of the Government as well as having responsibility for the area of energy. That is a crazy situation.

Unfortunately governmental departmental portfolios have become stalking horse gifts between different politicians within the one party or between parties, allocated by and large without reference to the capacity of the individuals to service those Departments or to know what they are supposed to be doing. What we have is a seniority hierarchial authoritarian allocation by the Taoiseach of the day to satisfy his party, to satisfy regional party considerations and to satisfy the personal ambitions of individuals. While all that is just part of the system, it is highly undesirable in a country of 3.4 million people supposedly having an independent sovereign Government. After 60 years of self-government we are incapable of having a Cabinet governmental departmental structure capable of developing industry and services in a coherent way.

We may be critical of our State-sponsored bodies but a big argument developed about the setting up of a national development corporation. Such a body was envisaged as being the solution to all our problems, but while it is all right to set up such a body it becomes one huge mess unless the other superstructure is cleared out of the way. For example, let us take a State-sponsored body in terms of its relationship with a national development corporation. Let us suppose that we have a national enterprise agency. Presumably, those in that agency would want the body retained. In other words, in Ireland everything remains in some form or other. Let us assume that tomorrow we establish a national development corporation and that there is a question of some major new piece of electronic technology. What happens? We go to the national development corporation, to the national enterprise agency, to the relevant State-sponsored body and having been with the chief executive of that body we go then to the board. After the board have spent a great deal of time debating the issue with management and usually with other powers in the land, what do they do then? No matter which State-sponsored body are concerned they will become involved with three Departments, inevitably with the parent Department, also inevitably with the Department of Finance and then with the Department of the Public Service with whom everything winds up, staffing, salaries and so on. That having been done, back the whole thing goes to the Minister, who goes to the Government, the Government come to the Houses of the Oireachtas and by then somebody has had a nervous breakdown along the line and lost a file.

That kind of structure does not work, and the appalling profusion of development ideas here are not successful. Therefore we need dramatic changes in our structures. Take France. They have a Minister for Public Enterprises responsible for all public capital investment; they have a Minister for Technology responsible for that area, they have a Minister for the Budget and a Minister for Social Affairs.

Unfortunately, here we have not such a structure. If we are to have a real way forward we need dramatic changes in our overall Government structures. I share Deputy Bruton's view expressed at the end of his speech last night when he made a proposition to the Government. Unfortunately, this Government like all Governments do not wish to hear any more. Their plan will be recyled into 25 scripts between now and 16 November, the Clare by-election. It will be forgotten then. The plan will be useful around Ennistymon and Lahinch after Mass on Sunday mornings. Unfortunately that is what it will be used for.

Deputy Bruton suggested that we should have a budget committee of the House which could sit down not in confrontation or in a political argumentative way but which would sit in Room 114 and take the book of Estimates which is to be published in three weeks containing the projected outturn of expenditure for 1982. Incidentally, this is a unique development in the history of the State: it is the first time that we have been given in November a Book of Estimates in respect of 1983. We welcome that. Therefore, we should have a budget committee to discuss and if possible to reach agreement on the Estimates.

At the Labour Party Conference last week I stressed strongly that despite the severity of our current budget situation it is possible to do a great deal on economic and social development in a short period. We have the scandal of between 750,000 and 800,000 people living at the bare social welfare subsistence level. That scandal of poverty could be abolished. I had no hesitation in saying in Galway last week that here we spend £2 million a day, even in recession, on booze. I said that a small portion of that could solve poverty. I said to my colleagues and to the people of Galway that any country that could afford to spend £4 million at two days of horse racing in Ballybrit outside Galway can also afford to eliminate poverty. I went on to say that in a country which can give massive budget reliefs every year on house mortgages, even to people occupying from three bedrooms to six bedrooms, where people can have holiday homes and get mortgage relief on them, we can afford to house the homeless, the travelling people. I indicated in Galway that any country which could afford after-tax profits of £13,000 on one acre of rezoned agricultural land could well afford to provide decent serviced sites for the travelling people.

I strongly hold the view that a country in which profits from farming are nearly all untaxed could change the present situation dramatically by way of an equitable system of taxation. I think I correctly pointed out last weekend that the Government talk about a rational capital taxation being introduced between now and 1986 but when the Government had the opportunity in the last budget to introduce taxation on discretionary trusts whereby 1,600 of the wealthiest people have salted away £500 million which would have yielded £4 million in tax, the Government did not do it. Therefore, it is highly unlikely that the Government will do it between now and 1986. That is why I do not believe the Government's projection in regard to capital taxation.

I hope that any future Government which fail to commit themselves to basic reforms of our financial structures will not get the support of the Irish people. I believe that inevitably the outcome of the next general election will be that those who do not put their policies on an honest basis, without gimmicks or election promises, will not receive support. The policy of the Labour Party has been one of unremitting reluctance to give Dutch options. We have been reluctant to indulge in harebrained policies like demanding that small farmers compulsorily should be retired at the age of 65, that they should no longer be allowed to occupy their farms, that kind of undemocratic lunacy we have had from some political parties. I think that the fair, progressive, democratic policies of the Labour Party will be accepted by the electorate in the years ahead.

I should like to deal with The Workers' Party policy document.

I must interrupt Deputy Sherlock now and advise that, in accordance with Standing Order No. 38, notice has been given that it is proposed to interrupt business in order to have a statement made. I call on the Taoiseach.

Debate adjourned.
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