Deputy Frank Fahey is in possession and he has 25 minutes.
Financial Resolutions, 1983. - Financial Resolution No. 14: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance)
I have endeavoured to point out the various differences existing between the Government parties in relation to their budget strategy. There are a few further serious misrepresentations by the Government in relation to this and, in particular, to their commitments prior to and after the last election. For instance, as I said yesterday, in the Fine Gael-Labour Programme for Government, dated December, 1982, their most important objective was to reduce unemployment. They make a number of commitments and I quote:
As an immediate measure, a sum of £100m. from the Contingency Fund in the recently published Public Capital Programme will be set aside to finance work of this kind during 1983.
This provision has been scrapped in the present budget. I further quote:
There are a number of cases involving, we believe, up to a further £100m. of projects in which infrastructural work could be usefully undertaken on a joint public-private basis, drawing in additional private capital for employment creation. Arrangements will be made to mount such joint ventures with relevant financial institutions or other private interests.
Again the Government have reneged on that promise. In the section devoted to agriculture, they honour their promise to provide a further £3 million for disease eradication, but remove £1.85 million from the same disease eradication programme, which means an increase of only approximately £1 million. Would the Minister for Agriculture explain why he found it necessary to remove this £1.85 million in trying to juggle figures to add £3 million?
Under the heading of farm modernisation, the Government commitment reads:
We must seek to reinforce its development role to the maximum possible extent.
Unfortunately, in this budget the farm modernisation scheme has been scrapped. Under the heading of taxation:
Indirect tax increases to be minimised in order to help reduce inflation.
We know what has happened in that regard.
Tax credits to be substituted for tax allowances in order to secure greater equity as between income groups.
We know what has happened to the tax credits.
It is interesting to point out also that in the January 1982 Budget reference was made to provisions in the Finance Bill for the introduction of these tax credits. However, in this latest budget we are told simply that they are for another day. Therefore one can only assume that that programme is to be scrapped altogether.
I believe those inequities should be highlighted because members of this Government were very strong in their criticism of Fianna Fáil Governments when manifestoes, promises or whatever were produced and not adhered to, at least in the view of the Fine Gael Party in particular it was felt they were not adhered to. It is important that we show up the total lack of commitment to the people on the part of this Government in this budget, commitments made before and after the last election when the two parties came together to draw up their Programme for Government.
I am seriously concerned that this Government have lost their nerve. Let me say that I want this Government to continue in office. I do not think the country needs a general election until they have had an opportunity to sort out the serious problems with which we are confronted. But it is becoming clear now that this Government are losing their nerve, that they are failing to carry out the promises laid down in black and white in the Fine Gael/Labour Programme for Government. We must remind them at every opportunity that this is not acceptable.
We must remind the Labour Party also of their important role in Irish society. Indeed I might point out that in their manifesto in the last election they declared that they represented ordinary working people. They emphasised that Labour does not accept the prospect of continuing mass unemployment, that Labour does not accept that essential economic and social reforms stop with the recession. It is about time Deputies in the Labour Party looked carefully at this Programme for Government and implemented those very basic commitments given.
I want to deal with two other aspects of the budget before concluding. The first is in regard to agriculture. A number of important areas in the agricultural industry have been affected by this budget. In particular we notice that the Government have abolished the one and only scheme for the structural improvement and development of our farms. This represents a reprehensible step because it leaves our farmers with a negative approach to farm development in 1983. The budget fails totally to recognise the problems of agriculture. In cutting back on several schemes which were doing something to improve agriculture they have left our farmers now in a situation in which they will feel the best thing to do is as little as possible by way of improvement or development.
The Minister for Agriculture mentioned the farm retirement scheme yesterday and said that because it had been underutilised, with approximately only 600 people availing of its provisions in the last couple of years it should be scrapped. In my view this is a retrograde step when viewed in the spirit of agricultural development as experienced in the last few years. While I agree that the scheme has been underutilised, that unfortunately not many farmers have felt it wise to retire and making their land available to younger, more progressive farmers, I do not think the proper thing to do is abolish that scheme altogether. Instead, its advantages should be put across to older farmers so that they would be encouraged to avail of it.
The Department of Agriculture should proceed with their programme of making more land available to young, progressive farmers who will utilise it to the full. The big problem being experienced in Irish agriculture at present is the under-utilisation of land. We have also the very serious problem of underproductivity in Irish agriculture. One has only to drive along our roads to observe this under-utilisation and underproductivity about which I speak. If we could overcome these problems we could create enormous growth in incomes. We all read in the newspapers about two months ago of a farmer farming 18 acres in County Leitrim and of the productivity he was able to achieve in dairy farming. That is the type of programme in agriculture that should be put across by this Government.
The other big problem being experienced in agriculture is our failure to benefit from the EEC. We entered that Community with great expectations, because we knew we were entering a market of many millions of people and that, as a food producing country, our agricultural industry could benefit. It did benefit for a while, but unfortunately in recent years we have failed to capitalise on the bonanza of the EEC, the reason being that, while we have reasonably good agricultural produce, while our raw materials are good, we have failed utterly to process and market those goods and make them available across Europe.
In this regard I had hoped that some stimulus would have been provided in this budget for the food processing and marketing industry. Even though this is repetition, I suggested here, in the course of my maiden speech on the Fianna Fáil Economic Plan, The Way Forward that it was very important that the Government set up an organisation to oversee the processing and marketing of Irish food. Unless we are prepared to process our raw materials, with its full added-value, unless we are prepared to market our food to a very high degree in Europe, then we shall never reap the benefit our agriculture deserves. In that regard we need only look at the success of Kerry-gold butter. It is absolutely essential that the Government now examine the possibility of marketing Irish food in Europe under the one brand name, thereby having an essentially Irish element. If this were done I am quite satisfied that thousands of jobs could be created in this indigenous industry. I implore the Government to examine that aspect. Indeed, I was encouraged by a reference to this some time ago by the Tánaiste when he expressed his desire to see a major reshuffle in the processing and marketing of Irish food. The Government's decision to ignore developments last week in relation to the CBF constitutes a retrograde step.
I come now to what I believe to be the most serious problem confronting our economy at present, to what I believe also is an area which has been totally neglected by every Government. At the risk of repeating myself, I must refer again to imported goods. I dealt with this problem on the two occasions I have spoken in this House so far with, unfortunately, no reaction from any quarter. If I might refer the House back to the 1940s when Eamon de Valera said in a broadcast to the nation that the problem of unemployment affecting industrialised countries could be solved in our particular conditions here, that if we set out to produce for our home market we could provide work for a number greater than that of our unemployed. When was the last time we heard a senior Irish politician talk in that vein? When was the last time there was any serious debate on the cancer of foreign products being imported here at the rate of almost £100 million a week?
When was the last time there was an effort by any Government to deal with this problem? In recent times we have been found to be in contravention of EEC legislation by our Buy Irish Campaign. However, it is my firm belief that if we can convince our people to buy Irish products it will be a most important step towards rectifying the problems of our economy. There is no point in talking about financial rectitude or about cutting the current budget deficit unless we tackle the problems that are basic to our economic difficulties.
We cannot accept the closure of a company like Ranks. This company use the produce of our farms and produce a food which is basic to our lives. Apparently they are now to import this product from England. This is the greatest scandal to befall this country during my few years in politics and I am amazed that there has not been an outcry by the politicians and the people against this closure. There has been an outcry about another development which, although it is important, certainly has not the same degree of importance as the closure of this firm. We must go back as de Valera did to some simple solutions. There is no reason why the acreage of grain should not be substantially increased and there is no reason why the necessary investment should not be made to enable Ranks to modernise and compete effectively.
When I spoke here in November I said that the people would respond if we as politicians, and the Government especially, were to make strenuous efforts to show the folly of buying imported goods. Each person must be convinced that when buying anything other than an Irish product he or she is giving away the job of a father or a son or a member of the family. A concerted campaign should be waged by the Government so that this message is brought home to every sector of society. This would enable us to reduce our import bill very substantially. The statistics are alarming. We import £60 million worth of goods each week through Dublin port alone. Penetration of imports has increased from 29 per cent in 1977 to 37.5 per cent in 1980 and this trend is growing. This is the greatest problem facing the Government but unfortunately they did not consider it necessary to mention it in their Budget Statement.
I am anxious to see both sides of this House coming together and co-ordinating a policy which will achieve growth in the sales of Irish goods. Even if we did convince people to be patriotic and buy Irish-made goods, in many cases they would not be making a wise decision and the Government must attempt to improve the quality and value of our goods. In the Fianna Fáil economic plan an effort was made in this direction with the company development plan and the company-by-company approach. The necessary resources should be made available to make firms more efficient and enable them to produce higher quality goods giving better value. If we cannot compete at home it will be very difficult to compete in export markets and I urge the Government above all else to look seriously at this question. I look forward to hearing their proposals in this regard in the near future.
The conclusion of the Minister's budget speech sums up the Government's will to give in to the problems facing us. The Minister stated:
Today is not a time for despair or for hopelessness in the face of the magnitude and complexity of our problems.
We have met and countered inflation before this. The Irish people have in the past suffered cruel unemployment and surmounted it. For decades we have been making progress, slow though it might often seem, against inequality.
The Government do not appear to be prepared to tackle the problems they outline. The Minister continued:
We can do all these things again if only we have the will. We can do them if our leaders show the resolve required to motivate our community, and it is as a community that we must face our problems.
The Government do not appear to have the necessary resolve and will to tackle the difficulties of inflation, unemployment and inequality. We are all agreed on the need for financial rectitude but the price this economy must pay for the improvements proposed in this budget means that the very core of our economy will be damaged to the extent that we will have an even larger budget deficit in coming years.
I urge the Government to think again and to fill the gaps, to provide the stimulation, the motivation and the will to succeed by immediate, effective action. This is needed by the people and by the economy and its absence is evident in this budget. The strategy outlined in the budget will put our economy into a tailspin from which it will be very difficult to recover. Let me warn this Government that they will be held responsible for the economic mess in which we will find ourselves towards the end of this year and in 1984. What is needed now is leadership and government like a stonecutter's chisel. Unfortunately, this Government have a lot of sharpening up to do.
Last week a leading politician said in relation to this budget "Of course, the public finances are in a difficult state and corrective action must be taken. Services must be cut back, expenditure curtailed, borrowing reduced..." I think there are very few who would quibble with that analysis of the problem or with the measures suggested in that comment. That comment, reported at column 1553 of the Official Report of 9 February, was made by the Leader of the Opposition, Deputy Haughey. In the light of that, and other comments made by the Leader of the Opposition, it is rather odd to find him and Members of his party adopting a different approach. It is clear to any objective observer that our public finances are in a difficult state and that corrective action must be taken. It is obvious that that action must relate to a reduction of services, a curtailment of expenditure and a reduction in borrowing.
In fairness to the Leader of the Opposition, in making the comment I referred to he put in a qualification in regard to the protection of the less well-off people in our community. However, it is clear that the budget went as far as possible in that area. There was an increase in social welfare. Although it was not as much as many of us would like to give the increase was reasonable in the context of the figures allowed last year, and in the context of the money available now. We have the new family income supplement to benefit workers with low incomes, the reactivation of the Combat Poverty Agency, a special funding for the voluntary social organisations and a special allocation for the housing of the elderly. It is clear that in spite of the problems the budget went as far as possible in granting broad increases in social welfare and introducing such special measures for the less well-off.
It is clear that in their heart of hearts the Opposition agree that their prescriptions for budgetary strategy as enunciated by the Opposition doctor is broadly similar to that of the Government doctor, that we have no option but to reduce our borrowing, the results of which have put the country into an economic strangle-hold. It is clear when we are in a deficit situation that the first and major task has to be to decide on the borrowing requirement, how far is one going to fund the Exchequer in the current year with borrowing. After that the other figures fall into place. Where the background is such that there is a clear need to reduce the borrowing it makes that starting point all the more important.
In 1982 we had a borrowing figure of £1,945 million which represented 16½ per cent of GNP, £988 million on the current side and £957 million on the capital side. Any sane observer will agree that with such a huge figure and a major percentage of GNP involved there was no way in which the country could continue on that path. I give credit to the Opposition because they saw the problem but our quibble is that they did not take the steps when they had the chance to turn the tide earlier and when it would have been easier to do so. I believe that they agree that our approach in regard to the reduction in borrowing is essential if we are to have any future. In fact, not alone is there broad agreement from the Opposition in principle but reading their documents and speeches it is clear that there is broad agreement on the extent of borrowing for 1983. The figure this year will be approximately £1,700 million, a considerable reduction as a percentage of 1983 GNP.
It is significant that the Opposition, in spite of the natural urge while in Opposition to be more free and easy with the money of the State, not alone agree on the need to reduce borrowing but on the figure for the maximum borrowing requirement of the State this year. It is not a surprise to anybody to learn that the Government and the Opposition are ad idem on the approach to this figure. The background is clear, we have had an increase between 1977 and 1982 in our national debt from £5 billion to approximately £12 billion. In that short period we have had an increase which was far more than the entire amount over the previous 55 years since we obtained our freedom in this part of the island. We know that all the income tax we will collect in the current year will not be sufficient to meet the interest payment on that borrowing. That may pass over people's heads although those who are paying tax under the PAYE system when they look at their weekly or monthly deductions would be happier if they knew that the money being deducted was not just going to pay the moneylenders but would be doing something productive for the country. Unfortunately, as a result of recent borrowing trends that is not so and the money is going to the lenders to the State, international bankers, to repay interest on our past borrowings.
It is proper that we should pause and consider the result of taking the easy path over the last five years because more and more we went into foreign borrowing. It sounded grand at the time and the interest rates were attractive but the problem arose when we had to pay back because we had to do so in the currency we borrowed. When one borrows hard currencies one then hits a problem when that currency appreciates and one finds that the repayments are greater than originally envisaged. The figures for last year show the result of that misguided policy, not misguided because we should not have resorted to it at all, but because of the extent to which we resorted to it. Last year alone foreign currency appreciation added £340 million to our total foreign debt. It is clear that if we continue on that path the problem will become much worse in the years ahead. That is one of the major problems of foreign borrowing.
There is also the problem of the balance of payments deficit. Last year foreign interest charges accounted for one half of our balance of payments deficit. Apart from the history of the situation and the problems with which we are now afflicted as a result of foreign borrowing, there is also the factor of whether money will be so free and easy from foreign sources in the future. We all know the developments in the international markets in recent times. We have seen the defaults of major countries with problems in Poland, Mexico, the South American countries and many African countries. Two weeks ago Zambia defaulted on interest payments. Obviously, this will cause further pressure on the international banking system.
In addition, quite clearly a difficulty will arise somewhat ironically from the drop in oil prices. The big flood of petro-dollars will be trimmed somewhat because of the drop in oil prices. Moneys available to the international banking system will not be so plentiful as they were in the past. Apart from the inadvisability of over-concentration on foreign borrowing, we must face the situation in the times ahead that money will not be as freely available on the international markets as heretofore.
Coming back to my starting point, we are agreed on the need to reduce our borrowing requirement. I accept that there is a difference in approach within the parameter of the £1,700 million approximately. As far as one can discern from the Opposition documents, there would be a greater concentration from the borrowing point of view on capital borrowing if they were in Government, and they would go for a lower current deficit. On the Government side we are talking about approximately £900 million borrowing on the current side, and approximately £825 million on the capital side, whereas the Opposition talk about around £1 billion on the capital side and £750 million on the current side.
There is a slight difference in approach there. While the Opposition talk about what they could do with the extra money borrowed on the capital side — and they are quite entitled to do so — correspondingly there is an onus on them, if they are to have any credibility, to tell us how they would reduce the borrowing figure on the current side. I have no doubt the former Minister for Finance will deal with this point. I will be very interested to hear his views. If they were in Government how would the Opposition have raised the £700 million to bridge the gap on current account?
That is the Government's worry now.
The Minister should not pose questions to the former Minister.
I accept your ruling. I could not resist my fellow Corkonian on the other side of the House. I looked at his honest face and I thought I would chance putting the question to him.
The Minister's constituents will be very interested in the content of his statement.
Anybody who suggests that there should be greater borrowing on the capital side and who also accepts the total borrowing figure must account for how the gap can be bridged on the current side. From the approach adopted from the Opposition, it is clear that they would have had to account for the raising of £700 million in extra taxes if their figures were to stand up on the current side. That would appear to be the strategy they would have adopted within that borrowing requirement.
Since the introduction of the budget there was some discussion in the House on how that gap could be closed. Naturally some Opposition speakers reached for the easy option. A number of vague references were made to expenditure cuts. That is a very useful refuge in Opposition. I recall Deputy Seamus Brennan and a number of others following that line. Is it open, with any degree of credibility, to a Member of the Opposition to go up that laneway? I think it is a cul de sac because the levels of expenditure were already set as proposed by the Opposition. We are dealing with a Book of Estimates which was produced by the Opposition when they were in Government.
And which was interfered with by the Government.
They produced the Book of Estimates which set the levels of expenditure and, therefore, it is not open to a Member of the Opposition now to indicate that, instead of higher taxation being imposed expenditures would have been cut. The opportunity came at the time of the preparation of the Book of Estimates. We reduced expenditure in relation to the Book of Estimates. We lopped £105 million off it. We had to. There were other adjustments. We revised some of the figures but substantially they were the same. We allowed £31 million extra which was a more logical figure in relation to unemployment benefit, bearing in mind the rising trend in unemployment.
The basic point I am making is that it is not now open to the Opposition to suggest that the current deficit could be reduced by expenditure cuts. They had the opportunity to provide those. The only logical approach they can now adopt is to indicate to us, if they wish to have any credibility, where they would have raised the £700 million in taxation. That is the figure we are missing from them. I accept that there will be a degree of reluctance on their part to disclose that. There is always a degree of reluctance in Opposition to imposing taxation, as it were, from the Opposition benches. If they are to have any degree of credibility in this debate they will have to give us an indication of that. That is the inescapable position in which they have put themselves in regard to this debate.
It is clear from what I have said that, where there is an agreement on the borrowing requirement, approximately £1,700 million, and where there is a proposal from the Opposition that there should have been greater emphasis on capital borrowing, their proposal would have resulted in less borrowing on the current side and therefore extra taxation. There I have to part company with the Opposition in discussing this budget. I do not think the country could bear the type of taxation measures implicit in the Opposition's approach. We all agree that the country is groaning under a weight of taxation that is quite excessive and, that once we get public finances in order, our energies must be concentrated on reducing the weight of taxation. Furthermore, most independent commentators will accept that the taxation requirement which is implicit in the Opposition approach would have had catastrophic effects on the economy and would have been so deflationary as to put the country out of action for the current year.
I would also like to comment on the approach with regard to the capital side. When I came into this House a number of years ago and tried to pick up the mechanics of budgetary strategy, I accepted as a matter of course that one should borrow for capital purposes as it was productive and provided jobs. I came to the conclusion that it was the only way to solve our unemployment problem and that the more money one spent on the capital side by way of borrowing, the more chance one had of solving the unemployment problem. At this stage, I am beginning to doubt the merit of that approach. I have been wondering for quite a long time why if that is the correct approach, we have an unemployment problem. There has been so much borrowing in recent years and what is the result? We do not seem to be achieving the result from our borrowing, even on the capital side, that we should have achieved. I was struck by an article in an excellent document produced by the Institute of Public Administration, "Unequal Achievement", an analysis of the situation in regard to public expenditure. The author was Mr. Moore McDowell. He spoke about the generation of public expenditure growth and he refers to it as "Leviathan Unchained". That seems to be a rather apt description. In commenting on public sector investment, he states that there is, however, much evidence of appalling public sector investment decisions which point to a catastrophic fall in the productivity of public sector investment. Then he says that there is no measurable, direct return to infrastructural investment. We have all glibly accepted that when one borrows for capital purposes, it is going to produce the correct return in the context of productivity and employment. However, it seems now that this is not so. In future, when anyone suggests that to me I will have to ask, where is the proof? It seems fairly clear that this is not true, the figures are not there to justify it. If one questions that approach now, one also has to think of the consequences for capital borrowing because capital borrowing has to be repaid through current account. We are now feeling the impact of past borrowing for capital and current purposes. I am not an economist but there must be a question mark against the glib assertion that money borrowed for capital purposes is productive and, because it is for investment purposes, is going to lead to a reduction in unemployment. In the weeks and months ahead this aspect will have to be teased out further.
The budget was harsh but, in the context of the reduction of the borrowing requirement, it had to be and I have great confidence in the common sense of the people. I believe there is a broad acceptance of the need for the measures that were taken in the budget, despite the fact that in the poll in The Irish Times this morning, three out of four people expect their standards of living to drop. Of course their standards of living will drop, we have been living beyond our means and if that situation is to be corrected we must live within our means in national and personal terms. This is going to force a reduction in our standard of living but there is a new air of reality and perhaps a less selfish approach on the part of our people. There is a realisation that today's borrowing is tomorrow's taxation. People are concerned that our country should be left in a reasonable condition for our children to inherit. The selfish approach of spend, spend and borrow, borrow without regard to the consequences, seems to be gone.
There are two criticisms of the budget that need to be looked at in some detail. One was that the budget did not do enough for unemployment and that it lacked imagination. Some of this criticism came from the Opposition benches and some came from independent commentators. It is probably correct to say that the budget did not do enough for unemployment. Normally when there is unemployment, the reaction, according to economists, is to stimulate domestic demand and the effects are supposed to work their way through the economy with greater demand, greater buying, greater production and greater employment. Was that option open to us? You stimulate demand by putting more money into the economy but, in this instance, it was not there unless you borrowed it and this was the constraint which was on us. Borrowing is a tightening noose of constraint which is choking our capacity to take effective action to deal with unemployment. Even if we had wished to follow that course it was not open to us to do so. If we had been in a situation with no deficit, obviously it is a course which we would have been very anxious to follow despite the fact that unforeseen results can arise from that kind of approach which are not of direct benefit to the economy.
I remember the 1977 manifesto where the approach was borrow, borrow, spend, spend and this will solve our unemployment problem. The attitude was, more spending, more demand, more production and more jobs, but it did not work. Why did it not work? As an open economy it is now accepted that where that type of economic measures are taken at least half the increase in demand leaks outside the State. This is what happened after 1977. Jobs resulted from the approach then taken — some jobs were here but there were many more in Birmingham, Liverpool, Peking, Tokyo and other places from which we import our goods. That is not the total solution but despite that it probably would have been the approach to adopt in the light of our appalling unemployment figures but because of our debt situation that approach was not open to us.
What do we do about unemployment? It has to be faced in another way and I believe now is the time to do it. Because this Government are not able to follow the line I mentioned of giving a stimulus to domestic demand, they will take a number of measures in the employment area. These measures will be of a non-budgetary nature but they will promote expansion of output and employment. They will be a concentration on ensuring the maintanance of the competitiveness of Irish goods and services in the domestic and external markets. Obviously that has to be so in the context of our membership of the EEC and in an open market situation. There is no tear in the eye abroad for Irish goods. They will have to sell on their merits and if they are not competitive they will not sell. We have to ensure the maintance of the competitiveness of Irish goods and, where necessary, an improvement in this area.
We have to take steps to improve the problems on the side of management, with regard to weaknesses in production, in design and in marketing. I was interested to hear the comments of Deputy Fahey regarding the success of Kerry-gold. That was a success story but it has to be multiplied in the months and years ahead. There must be a better approach on management side to personnel problems and industrial relations generally. All these are areas that, to a greater or lesser degree, affect the management side in our productive undertakings. There must be a positive approach to tackling them.
Then we come to the labour cost factor. There tends to be an over-emphasis on this and while I say it is just one factor, I accept entirely that it is a very important factor. The old truism was that one man's increase was another man's redundancy and I think that message is getting through to more people who are working today. We must ensure that unit costs so far as labour is concerned are kept at least as competitive as unit costs in other countries where we are competing for a share in the market. We have special problems here because of the small scale of the operation on the domestic market and we have limited research and development. However, there is a market of 260 million people in the EEC with free access to that market and I think we can make vast improvements. I do not think we are taking full advantage of that huge market. Apart from the fact that we are an island, in view of our history our horizons may have been somewhat limited in the past but we must expand those horizons to take advantage of that huge market. The Government will be nudging, pushing, cajoling and persuading people in that direction in the years ahead. In addition, a special task force of Ministers will be set up very shortly with the purpose of co-ordinating this approach and they will produce a blueprint that will be the basis for tackling our unemployment problem. There will be the National Planning Board. Our approach in regard to the reform of Dáil procedures——
Tell us about the National Planning Board.
The former Minister will have ample opportunity to talk about that. I do not think we should underestimate the effect of the improvements for the efficiency of this House but perhaps even more so of the approach being adopted in regard to improvements in the public sector. Public service reform is an essential ingredient in getting this country in a trim and efficient condition.
Although I was very young at the time I remember the problems that existed in the late forties and fifties. In my area when one talked about a job one meant going on the Innisfallen boat leaving Cork for England.
They cannot go on that now. That does not exist any longer because of the decision of the Government.
We will keep them at home and give them jobs instead. There was a gloomy attitude in those days. In many ways the major breakthrough was the First Programme for Economic Expansion and leading up to that a change in outlook and approach, although it was not related to budgetary strategy. We had the Control of Manufactures Act in operation. Is it not incredible today that this was the strategy of the thirties and stretching into the forties and fifties? The situation was that a person from outside was not permitted to set up a manufacturing enterprise here. I believe that approach was Sinn Féin gone mad. Fortunately in the late forties and fifties people started to question whether this was the correct approach and we had the foundation of the IDA and Córas Tráchtála. In 1956 one of the most important Bills ever was introduced in this House. It was the Encouragement of External Development Bill, 1956, introduced by the late Gerard Sweetman. On the change of Government in 1957, fortunately we had the follow-on with the Whitaker-Lemass approach resulting in the First Programme for Economic Expansion.
We have now to question the basis on which we had been working in the past. Now we need another new brave approach. On the silver jubilee of the First Programme for Economic Expansion we need a new approach and beginning. In many ways the outline I have given of the approach to be adopted by the Government and the measures to be taken will provide that new thrust that will enable us to make, to use the Chinese expression, a great leap forward. I say that in a jocose way but I believe firmly that we must seek that new approach at this stage. I hope that will be the major part of the solution to the problem. It is not correct to say that this Government are not absolutely and totally concerned about the extent of our unemployment problem. We do not accept that there is a simple solution to it but there will be a major concentration on attempting to find the solution.
Two criticisms of the budget must be looked at in detail. The second is lack of imagination. I always think that anybody coming in here to speak on the budget imagines himself or herself to be the Minister for Finance. Any Member is entitled to come into this House and put forward measures as if he or she were Minister for Finance. If I hear members of the Opposition or the Government side coming in with that approach I am delighted, with the one qualification that anybody coming in here as shadow Minister for Finance, so to speak, making proposals for solutions, if he seeks any credibility, must say how the proposals should be paid for. It is easy to suggest that more money should be provided for the farmers or a lesser burden on the PAYE sector and so on, but anybody making any such proposal must tell us how it will be paid for. Anybody standing in here imagining himself Minister for Finance must take the same overview, the same broad look at the situation and provide the same balance. If you put the budget arithmetic out of plumb by saying that the PAYE sector should get £50 million relief you must tell us where that £50 million is to come from.
Some of the suggestions that have come through in this debate so far have been interesting and, if implemented, would do a great deal for this country, but I fear that the other side of the equation, the balance on the scales, has not been forthcoming. How were these suggestions to be paid for? I myself would toss in a number of such suggestions if time permitted but again I would have to feel that in doing so it would not be credible unless I could say where the money to pay for them would come from. I see a smile from the Opposition benches. I will give an example. I believe that, say, tourism is an area——
It was reduced by £1 million.
——where confidence needs to be boosted and I would very much like to see that confidence brought back to tourism. If I should say, "OK, there should be an extra £2 million for tourism which could be used, say, to co-finance promotional efforts by hoteliers and other people involved in the tourist area", it would be an excellent idea that funds would be available to the tune of £2 million to back £ for £ promotional efforts by people involved in that area to attract more tourists. However, there would be no credibility in my making that proposal in this House unless I said where that £2 million would come from. Having produced that proposal I would have to restore any credibility I would have in this area by saying that there is a way of paying for it. It might not be the absolute answer. Travel tax went up to £5. In the current year that increase will bring in £2.3 million and in a full year £3 million. OK, instead of increasing it to £5 increase it to £10 and that would bring in more than enough for that purpose. There may be administrative and other complications in taking that step but, having put forward the proposal on the one side, I suggest that that might be the way to pay for it. If there are any further suggestions of a similar nature from the Opposition I would ask if they propose to spend money that they tell us where it is to come from.
The Minister's shoe is pinching, is it not?
One other aspect I want to refer to is the fact that the budget provided an extra £3 million for overseas aid. I was very glad that this extra funding was provided. I must confess that I was a little disturbed this morning to see a suggestion by the Lord Bishop of Galway, Dr. Casey, that I had been misleading when I said in my statement that there was an increase of 22 per cent on last year's contribution.
The Minister is attacking the clergy. How could he?
I accept entirely that Bishop Casey would have wished to have an even greater increase provided by the Government for development assistance. I accept also that the amount of increase which was given in the budget does not meet the .05 increase in GNP, but I cannot and will not accept a suggestion that I, as Minister of State with special responsibility in this area, had been misleading. I do not accept that because I said in my statement that the Estimate this year would amount to an increase of more than 22 per cent over the outturn for 1982. That statement was correct and I stand over it. While I accept entirely Bishop Casey's entitlement to say that more money should be made available, he should not say that I, as Minister of State, was misleading in my statement. The outturn for official development assistance last year was about £24.5 million. The provision for this year is over £30 million. Anybody who would work out a percentage on that would be able to verify that this amounts to an increase of over 22 per cent on last year's outturn.
While dealing with that area, I hope and expect that in the years ahead, despite the problems we have, we will see even greater progress towards the UN recommended target of .7 per cent of GNP. The Estimates that we were left with from the other side of the House would have resulted in reduction in GNP this year. It would have resulted in this country sliding backwards in the approach towards the UN target. Fortunately, because of the extra allocation made available by this Government who have a genuine care and concern for the problems of people of the Third World, we have a figure now which will enable us to make some improvement towards the UN target, not as great an improvement as we would have wished but at least some improvement. We are still heading in the right direction. In the years ahead while this Government are in power I will be pushing very strongly indeed to ensure that further and even greater progress will be made towards reaching the UN target. Perhaps this is a good note on which to conclude because in many ways we could sink ourselves into a deep well of gloom thinking about our economic problems. It would be salutary for anybody in that frame of mind to go and see how people live in the Third World, where people very simply do not have enough to eat, where there is no problem about the mortgage rate, the problem is that they have no housing. There is no problem about PRSI, social welfare and so on; the problem is that there is absolutely no work there at all. It is important to remember that, despite the difficulties in that area, we are, out of a total membership of the international community of 150 countries, the 25th richest in the world and our GNP per capita is so far ahead of the least developed countries that they are not in the same league at all. I mention this for two reasons, I am glad we are making our contribution to help the people in the Third World in their absolutely extreme difficulties, where people are dying of hunger and starvation and at the same time to put into perspective the feelings of the people in this country in relation to our situation, that we are in economic difficulties but in relative terms we do not compare with the people who are in real difficulty.
Any reasonable person examining the budget and the hopeful effects of it will have to agree in broad terms with the strategy adopted. I believe that with this budget we have laid the foundations for the future. The first thing that any person trying to build any structure has to do is to lay the foundations. You have to dig down before you start building up. The benefit of what we are doing may not be apparent in the short term. It may not be apparent to members of the Opposition who probably would not be tempted to look down and see the mass of concrete beneath the ground, who naturally demand instant results and instant solutions to the problems.
I believe that in the budget we have laid a good, firm foundation on which we can build for the future and with that firm foundation and the improvement that will result in our public finances and the reduction in our borrowing requirements we will put ourselves in a position that in the years ahead we will be able to devote a great amount of money towards the purpose we would like to be devoting it, into investment to produce jobs. In the heel of the hunt, the money that should be going into investment and improving our economic situation, the money that should be improving the lot of the less well-off, making the social improvements that should be made, is not there. It is being sent out by way of interest and capital repayments on our borrowing. Once we get that problem right — we have started it and I believe the first step is the hardest — within two years I can see this country in a sound shape from the point of view of public finances. I can see it much better able to cope with problems in the international arena economically and I can see it in a much better position to cope with the real major problem of the country, the problem of unemployment among our young people.
If I was a member of the Labour Party listening to some of the remarks of the Minister of State towards the end of his speech I would shudder to think that he was saying in a most patronising way — I thought we were long gone from this — that those who have a job should be glad to have a job, that those who have a house are lucky to have one. He started with a defence of the arithmetic of the budget and the necessity for financial rectitude. He went from there to say how lucky we were to be alive and have enough to eat. I was appalled. It is such a departure from the contributions by that same Minister of State, who was then an Opposition Deputy, at the church gates of his widely spread West Cork constituency on the Sundays of last November. The constituents who heard him on that occasion should now read with interest his contribution in this House today. He is a different man now.
The Deputy was never that slow at the church gates.
The Minister of State will have to be orderly.
(Interruptions.)
After listening with interest to the speech of the Minister of State this morning, I must remind those people that he spoke at length and with such force this morning and I must remind them about the conversion that has taken place in their elected representative. I do not see the joy, the hope or the future ahead which the Minister of State sees. I am not sure if I should describe the budget as thick and tough or tough and thick. I am not sure which to put first. It is understandable that it had to be tough. No budget has been more universally criticised by every sector of society, from the employer organisations to the trade unions, from the trade unions to the farming organisations, from the farming organisations to the youth groups. Everybody has criticised this budget. If it has had anything going for it, it is that its reception has been consistent among all groups of society.
The thickness I referred to is to the lack of strategy. The Minister of State referred to a strategy in the budget. I fail to see it and I fail to see what course it was directing us on. Certainly, from the point of view of the Labour Party, it is quite obvious that the Ministers had no input at Cabinet table into the preparation of that budget.
I want to deal with some specific aspects of it. I do not believe it is for me to go in detail into this new approach of people on the other side of the House saying that your credibility is questioned if you do not put up the alternative money or ways in which it could be raised. Those people have the responsibility to govern. They sat on these benches so many times over the last five years when I was across on the other side and I heard them make all the promises, criticise all the moves and convey to the people that they had all the answers. What a change it is now.
The first subject I intend dealing with in some depth is the lack of approach to public service pay, pay policy and incomes policy. The Minister says that there is a need for pay restraint. I have to say that of course that is true but how we do it is very important. I claim some credit for the successful renegotiation of public service pay agreement in October last year. I indicated then if I was in Government I would, early in 1983, be meeting with the trade unions and the public sector to discuss 1983 strategy. No such meetings have taken place yet, no guidelines have been put forward. It is very important that we have pay restraint in the private and public sectors but the leadership given by the Government is so different from the strategy suggested by the then Fine Gael Front Bench when, as, many remember, the Leader of the then Opposition hastened back from a holiday abroad for the purpose of convening a meeting of the Fine Gael Front Bench following certain decisions that had been taken by the then Government at the August weekend, 1982. I have here a press statement, dated 5 September last, that was issued by the Fine Gael Front Bench and which was referred to at length by the Leader of the then main Opposition party. Before reading from that press release I might refer to the irresponsibility of the man who is now Taoiseach in issuing a statement on the day before the executive committee of the ICTU were to meet. This was the most irresponsible outburst from a leader of any main Opposition party that I have heard in my 11 years here. It was a deliberate attempt to undermine, in the interest of political gain and expediency, a situation being worked on by people who were concerned for the country as a whole. I challenge the Minister who is to follow me in this debate to deny this. I can expose it at any time that suits me. In the press release of the Fine Gael Front Bench, the Taoiseach said that he had also indicated the scale of increase in this pay bill in 1983 which he believed the economy could sustain. He expressed the hope that the damage done by the Government's hamfisted initial approach to the problem would not prejudice the achievement by agreement of an increase of the order of approximately 10 per cent in the total public service pay bill for 1983, including a carry-over from 1982 of special increases. Here we are a week after the budget and well into February with no indication of any leadership from the Government in the matter of public sector pay or of a pay and incomes policy generally. Of course, we have heard the Government refer to the importance of this issue but I have here too what I regard as a very good information document, one that I used a good deal while in Government and which I find very useful now also in Opposition. I refer to the Industrial Relations News Service Report. This contains a good deal of statistical information each week. The information is well researched. In the 4 February 1983 edition of this IRN report on page 2 there is the following heading "Government Pay Policy ‘Statement' Fails to Materialise". The first paragraph of the comment reads:
For almost an entire week, the industrial press was given to expect a major Government policy statement on pay, a statement that, for obvious reasons, was awaited with avid expectations. What eventually was released on January 28th was, for the industrial press, something of a ‘damp squib', with nothing new and, certainly nothing that could in any way be construed as ‘pay policy' contained.
That is comment from people who are aware of what is happening in the whole industrial relations area. It is fair and informed comment in relation to what was a build-up in the usual typical public relations style of this Government. Let us compare that with the insincerity being advanced in September last year when the Leader of the then Opposition hastened home from abroad and made it appear that he had done so to save the country from being mishandled by a Government that he considered not to be capable of handling the economy. Deputy Kelly shares my view as to how well the situation was handled then by us.
Despite the irresponsible and publicity-seeking efforts of Fine Gael then we still have no indication from them of their attitude in this area. We read in the document I have referred to that some pay settlements have been reached in the private sector. Income restraint is extremely important but this budget, rather than indicating leadership in that regard makes the situation more serious. Twelve-month settlements ranging from 13 to 15 per cent are being reached. That situation should not be allowed continue.
This whole matter of pay should not be led by public statements. There must be consultation and negotiation in private between the bodies concerned and the Government. There is no point in issuing edicts as to what should be done. On the Minister's admission the tax increases in the budget amount to 3½ per cent. When I suggested to him the other evening that we could refer to the increases in terms of 4 per cent plus, he did not disagree. The reality is that it will be 4 per cent plus the knock-on effects and apart from the 1 per cent levy. Therefore, we are starting from a base of 5 per cent plus knock-on effects. This represents a major contribution to further difficulties arising in respect of pay settlements.
We must have moderate pay settlements. I would not agree with the Minister of State at the Department of Foreign Affairs regarding redundant workers and no pay settlements being available. The approach must be to negotiate in the interest of all and to arrive at a level of increase that is in line with what the country and the companies can afford. We must ensure that the maximum benefit is derived from whatever increases are granted but if there is a strategy in this budget, it is a strategy of undermining to a large extent the possibility of arriving at the type of moderate pay increase that is needed so badly and that is the first damning feature of the budget. It will lead to further inflation, an increase in the CPI and demands for wage increases far beyond what we are able to pay. The lack of effort and of consultation in terms of getting together on this most important issue is already an indictment of the Government. The Taoiseach has not seen fit yet to come to grips with this important matter. I ask the Minister of State to tell his leader that the most important issue is the settlement by agreement and negotiation of the pay policy this year or next year.
Another point which has given rise to some public controversy is the arithmetic of the budget. I am not charging anybody with doing anything wrong, but I am convinced that the Minister has set out to achieve his budget deficit with something hidden in his back pocket. I support him and wish him well, but I agree with the ESRI commentators who say revenue has been deliberately estimated in a conservative way. That is understandable in the light of recent experience and the fear of what interest rates in the current year may be. Another area which will help the Minister is loan repayments. His estimate is probably more than will be required. In reaching that figure he was not being dishonest, he was simply being cautious. In my view the Minister has these two good windfalls to protect him. I wish him well in his efforts to achieve the current budget deficit, but I would hate to think he is using the protection of those two areas to ensure that his arithmetic turns out right.
The previous speaker said he agreed the budget did little or nothing for employment. I am surprised that the Labour Ministers have ignored the most important problem facing the nation. We have read a great deal about the National Development Corporation and how wrong Fianna Fáil were in not going ahead with it. I could never establish from the other parties what they meant by National Development Corporation. I read in the lead-in to the Limerick conference that hundreds of millions of pounds would be made available for this corporation, but £7 million has been provided in this budget — to be fair I think there is £10 million available because we made £3 million available and the Government are probably transferring that as well. No matter how one looks at it, £10 million is a far cry from hundreds of millions of pounds.
The emphasis in this budget has been on cutting back employment rather than helping employment. That must be our prime concern. The downturn in activity because of VAT increases, the actual cutbacks in capital expenditure and so on, will mean direct unemployment. The Minister of State argued theoretically how expenditure on capital development did not necessarily mean employment to the full value of the increased expenditure. No-one could disagree with that. One must accept that more infrastructural development makes an immediate impact on employment and in the longer term it makes infrastructure for industrial development more attractive and easier as time goes by. A year or two ago Deputy Reynolds, then Minister for Posts and Telegraphs was mocked when he said telephones would be available off the shelf in a short time, 1984. In my own city and county they will be available off the shelf by the end of the year 1983. My county has been hit much harder by this budget than other areas. Expenditure in areas like telecommunications, roads and so on help in developing manufacturing industry in the long term and this adds to employment. In my opinion the employment strategy in this budget is non-existent and the tendency is towards unemployment rather than employment.
There is no encouragement to export. The Government speakers seem to have thrown in the towel. I compliment my colleague, Deputy F. Fahey, a young man from Galway, who spoke in detail about the importance of the ‘Buy Irish" campaign. I am not too pushed about what they say in Europe about this campaign. They are all very good at protecting their own interests and it is possible that we have been good boys too often. The Minister of State at the Department of Agriculture, Deputy Hegarty, is having a meeting today in connection with flour imports. I wish him well. He said this morning he wanted to see these imports stopped and I agree with him and assure him that I will do anything I can to help him. The problems of flour milling in this country did not start with this or the last Government. They started many moons ago and the problems became more serious as time went on. I was involved with the first threatened closure of Kelly's of Kilcock, part of the Rank organisation and take some credit for the successful conclusion of negotiations which kept that bakery open. I was not very successful in my later efforts with Ranks dealing with the north Dublin bakery or the bakery in my own city. I often felt this company had a death wish in some of its enterprises in this country.
They supplied the industry with 32 per cent of the flour necessary and I do not like to see that flour being imported. I will support the Minister for Agriculture in his efforts to prevent that happening. As a Government we did not achieve what we wanted in this area and I look forward to seeing this Minister succeed. As we have seen, some people have been sent to prison but I do not want to go into that in detail. I realise these people have gone against their trade union decisions but I can imagine the frustration they feel as employees of a multi-national company which failed to provide the expected redundancy payments. The greater sin I see this company having committed is not having an investment programme.
I have complimented Deputy Fahey on his contribution to the "Buy Irish" Campaign. When Minister and in Opposition, I have rarely missed an opportunity of encouraging buying and selling Irish and am not too worried about who says that I should not. The quantity of imported foreign food on display in many of our large supermarkets is most unfair. We can produce food of a better quality and certainly from a less polluted environment than most of our European counterparts. All Members of this House at every organisational and trade union meetings, if they have an interest in the future of their country, should encourage the "Buy Irish" Campaign.
There is an unexplained tradition in the Fine Gael Party not to make much noise about buying Irish. Deputy Fahey has said that a job saved might be that of a father, mother, sister or brother and how important that would be. In some areas it is more fashionable to stand and walk in imported shoes, particularly for men. Some think it more trendy to stand and walk in imported shoes, although we have here some excellent manufacturers of these products. This does damage at a time of overall serious economic difficulty. It is not enough to pay lip service to buying Irish — positive steps must be taken. Many of our industries which could have been saved over the years have been lost through imports, mainly from low cost countries, with whose prices our manufacturers could not compete. However, I fully understand that the mother of three, four or five children may have to buy their clothing at the lower price. That is not the case about which I am talking. I am speaking about people who buy an imported product because it appears to be packaged more attractively than our own.
Were the Labour Party Ministers present when this Government programme was being prepared? I remember a former Leader of the Labour Party leading a section of a massive protest on PAYE when I was Minister for Labour. This former Leader, now a member of the Fine Gael Party, is conspicuous by his silence on this budget, the first in so many years which did nothing for equity. There was some window-dressing and whitewashing, but nothing in real terms. Not only has it done nothing for equity, but it has increased considerably the burden on PAYE contributors. Will the Labour Party Members continue to follow Fine Gael through the lobbies of this House in support of this budget? If so, they will be doing a major disservice to what was once a proud party of which the Leas-Cheann Comhairle is a respected member. The Labour Party supporters are disillusioned — the PAYE contributors on whose behalf they made so much noise for so long. These people ask, was it just craw-thumping? Our successive budgets recognised the need for steps towards equity, but the present budget is one major step backwards where tax equity is concerned, which, as the figures emerge during this year, will be shown clearly.
We have discussed the financial resolutions, some in detail, and late last Wednesday night I asked the Minister how the 1 per cent would work in respect of sectors other than PAYE. PAYE is the one area of collection where there is no problem, provided the money is sent in by the people doing that collecting. However, with regard to the collection of that 1 per cent from self-employed and farmers that is not equity, although I accept the administrative difficulties involved. This is doing the opposite to what we have been trying to do for so long.
I am extremely disappointed at the handling of the area of public service pay, although I will continue to support the necessity for restraint and any positive moves by the Government in that respect. The Government should not be sitting back and hoping that the problem will go away, because it will not. They must negotiate with the responsible parties and groups in this area.
I see school groups this morning in the gallery. It is good to see teachers bringing these children to see their national parliament and this should be encouraged. It is important that democracy should survive, although there are many who would like to see it pulled down. Motorists driving through urban and rural areas seeing the vast numbers of children getting out of school at closing time must appreciate the problem for whatever Government are in power. We should all endeavour to co-ordinate an approach to the greater use of training facilities and work experience programmes and the encouragement of inventive schemes and a lot more besides. Even all that will not solve this major problem, which is common to all Europe. Because of our population and workforce growth, it is a bigger problem for us. The Government have my sympathy and support in dealing with this problem for which there are no easy solutions and which will not disappear overnight. The population growth will be with us for ten years and this budget does absolutely nothing to tackle the ensuing problems.
A major departure from normal procedures occurred on budget day, when the Minister, in his long speech, glossed over certain items and we were then issued with the Principal Features of Budget. These contained items never heretofore, in my experience, contained in a document of this nature and which were not mentioned by the Minister. He spoke about cuts and cutbacks. He spoke about changes in the Estimates as had been presented. I support the Minister of State at the Department of Foreign Affairs in his statements of necessity for Dáil reform and indeed for public service reform. I have just remembered that there was just one item I forgot to mention when discussing public service pay. I support public service reform but it must be handled in conjunction with a good, loyal, hardworking and dedicated civil service. I believe that the greatest insult to that civil service was when this Government, in their wisdom, were considering what other means of taxation were available and almost went along the road of taxing gratuities being paid to long-serving civil servants. Despite the Taoiseach running for cover and saying there was no truth in rumours that there were possible retirements I can tell him that there were many people missing on Wednesday last on a day's leave who might not have returned on Thursday last had the Government not changed their direction at the last minute. The Minister of State at the Department of the Environment in the House knows that what I am saying is correct. He is aware also the terrible step it would have constituted because it would have been done without consultation or compensation. Surely the public service who have served us so well for so long deserve better treatment than that.
There is no doubt as well that consideration was given to the PRSI contributions as they apply to the public sector. I am now satisfied that there has been a postponement in this regard for the moment at any rate. There was a veiled threat in the budget speech that, in the event of additional moneys being needed for pay, they would have to be found somewhere else. These are areas at which I have no doubt the Minister for Finance is still looking. I warn this Government that issues of this nature do not warrant decision in that way. If ever to be contemplated they could be done only through consultation, agreement and negotiation. I support the necessity for public service reform but done in the way I have outlined. I wish my successor every success in that regard in any reasonable steps he proposes taking towards that end. There is one thing, however, on which I shall not compliment him and which must be a source of some embarrassment to him, that is, when the Minister for Finance, really scraping the bottom of the barrel, decided he could get £500,000 extra by charging fees to candidates in civil service examinations. How low can one stoop by seeking £500,000 in that way? Certainly I would have had very strong and hot words with any Minister for Finance, a colleague of mine, who tried to do that. It was an unfortunate step because it indicates to me a sort of patronising attitude, one of more or less saying to a young boy or girl: yes, you may sit for an examination but we will charge you a fee for doing so; you are being given a very great honour by being allowed. It smacks somewhat of the old, outdated apprenticeship or guild system as it was at that time. In fact time was, in the nursing service, when one had to pay to get in. There is a bit of that attitude about this proposal. Imagine Labour Ministers sitting at the Cabinet table while this retrograde step was being considered.
The speaker before me almost said: you are lucky to have jobs, to have houses, to have enough to eat compared with what I see when I go around. I accept and support the idea of more money being made available for overseas development aid. I should like to see even more being made available. I agree with the Minister of State there. But we must realise that there are many problems on our doorsteps, in our towns. There are also in rural areas where perhaps people are better catered for simply because people in need are better known than they are in our cities and towns. But there is quite a lot not so well known to so many. Therefore I am glad there is more money being made available for overseas development aid but that does not solve many of our problems at home.
The Minister of State said this morning there were cutbacks in some Estimates. We wish the Government well in their efforts to achieve them but I wonder how realistic are some of them. In this respect I shall mention one only. I see, in the revised Estimates, that there is a proposal to reduce Garda overtime by a further £3 million. I honestly believe that, in our Estimates, there would have been difficulty in achieving a cut of the magnitude we were proposing, or at least a limit of the magnitude we were proposing. But a further £3 million cut strikes me as being over-ambitious particularly when one remembers a crime such as the Shergar one committed last week.
I should like to hear the comments of the Minister of State at the Department of the Environment on the subject of controlled dwellings under the Rent Restrictions Act of last year that created such problems on all sides of the House as a result of the Supreme Court decision. We are awaiting the announcement of the establishment of the tribunal. In our Estimates there had been provision for £15.5 million for rent allowances for tentants of formerly controlled dwellings under the Acts. That figure is being reduced to £10.5 million, in other words a cut of £5 million and the explanation given is that it is being done in the light of more up-to-date information. I am aware of the contributions of the Minister of State present on this measure in the House. In view of his expressed interest I would ask him to tell the House what more up-to-date information became available between the preparation of our Estimates and theirs. I suspect it was a stab to find £5 million and that the only more up-to-date information might be a possible postponement of the establishment of the tribunal. I hope I am wrong but I should like the Minister of State to confirm or deny that.
I come now to the public capital expenditure side where we really see the cutting operation. Despite all the noise and promises, particularly those by the Labour Party in the lead up to and during the election campaign about what they would and would not do in Government and what they would not cut, in the Principal Features of Budget— the pink document — we are given all the details glossed over so lightly in the Minister's main budget speech. The Public Capital Programme as published by us was for a figure of £2,110 million. We are told this is being reduced to £1,890 million, a reduction of £220 million. We are told then where the principal elements of that reduction are — £27 million in sectoral economic investment, £41 million in productive infrastructure, £32 million in social infrastructure and the deferment of the global contingency provision of £120 million. I want an assurance from the Ministers opposite that companies such as Irish Steel, NET or Verolme Dockyard will be catered for if they need money and that jobs there will be protected. Other companies are involved also. What insurance exists for the workers in the companies to which I refer? Let us be honest about the effects of this measure.
The Leader of the Labour Party recently met a deputation from the trade unions and employers and all involved in the construction industry. They were impressed by his approach and believed that money would be available in the budget to help the building industry. The opposite was the case. In his own area of responsibility, provision for roads and sanitary services has been reduced by £18 million and housing by £13 million, a total of £31 million. The Minister for Social Welfare was a Member of this House during the term of the 1973-77 Coalition Government and he has often cited the great achievement of the Labour Minister who was responsible for housing. Is this cut in the housing provision a desirable social development? Certainly not.
These are some of the cuts in capital expenditure which the Minister of State at the Department of Foreign Affairs tried to defend this morning. He knew his case was a poor one and almost indefensible and he put up a brave show in the circumstances, especially considering the impact on his own region of some of these cuts.
Government Ministers in recent times seem to be attacking the press and they appear to have become supersensitive. This morning the Minister of State mentioned a comment by Bishop Casey as reported in the press. I do not wish to attack The Cork Examiner, which every Corkman, wherever he is, must read but an article on the front page of today's edition reports a statement by the president of Cork Chamber of Commerce accusing Deputy John Wilson of downgrading the Cork region. The Cork Chamber of Commerce is probably one of the best in the country and when the president of that body speaks he commands respect but I think he should check his facts. Under the heading “Chamber chief accuses Wilson” the article states:
The Government Minister accused of downgrading the Cork region was identified last evening as Fianna Fáil's John Wilson. Cork Chamber of Commerce President Mr. John McHenry named the ex-Fianna Fáil Transport Minister as the one who dismissed a request by a Cork delegation for Government investment in the Ringaskiddy deep-sea berth.
Let me put the record straight. In the 1982 Estimates prepared by the then Coalition Government no provision was made for a deep-water berth at Ringaskiddy. During the election campaign we indicated that on return to Government such money would be provided at the first opportunity. Our Leader indicated this during a visit to Ringaskiddy. Deputy John Wilson, who was then Minister for Transport, visited Cork in September and our Estimates when prepared included £1 million for the deep-water berth. Cork Harbour Commissioners were informed by letter on 8 December that this money would be made available and they went ahead and obtained a tender which would have given good value for money. However, we were told on Wednesday last that the money is no longer available because of the decision of this Government. I wish to contradict the reported statement of the president of Cork Chamber of Commerce. The commitment made by Deputy John Wilson was honoured. Last week I saw a prize-winning photograph of Deputy Wilson looking at me in a much more friendly manner than shown in this morning's edition of The Cork Examiner. I am not in any way blaming The Cork Examiner but I am complaining about a statement by a respected person in Cork and saying that he is not correct.
The Minister of State at the Department of Foreign Affairs said that when he was young jobs in West Cork were scarce and many people sailed away on the Innisfallen. They cannot do so this week because the B & I service no longer operates. No decisions were taken by the previous Government on the future of B & I in the Cork region. The part played by B & I goes back many decades and has many poignant memories for Cork families whose relatives emigrated. In recent years it has provided an extremely important link in the tourist industry but management decisions over a period of years have not helped and one has the impression that somewhere there was a death wish and a feeling that the Cork area did not need this service any longer. I ask the Government to instruct B & I to continue this service at least for the coming tourist season and at the same time to investigate the continuation of a link with the Welsh coast. The Cork-Swansea service operated very well for many years. Another decision which helped to speed the demise of the service was the taking away of the Connacht and its replacement by the Innisfallen. There have been several ships under the name Innisfallen and it is almost as much a part of Cork as the Shandon Bells. I would ask the Government seriously to consider a short-term B & I service to cope with this year's tourist season and to investigate the possible development of a new service.
In a debate such as this we are allowed what could be described as the parochial run but at this time it is extremely important for me because we have employment problems in Cork city and county. We were lucky to have many old traditional industries but the job losses in recent times have been great. I thank the IDA for bringing many new industries but, unfortunately, the fall-out was pretty high and the impact of new industries was less than might have been expected.
The budget strategy will do a lot of damage to the tourist industry. I was interested to hear the Minister of State, Deputy O'Keeffe, say this morning that tourism should give more and he suggested this should be done by the industry raising money itself. However, £1 million has been cut from the allocation to tourism and the employment incentive scheme has been withdrawn from the hotel and catering industry. I appeal to the Government to restore that. The hotel industry is suffering because of the imposition of VAT and a downturn in numbers. The Government should restore the employment incentive scheme to cover the hotel and catering industry and the building industry.
I do not want to be told that there is no money to restore that scheme. Accepting that there is a shortage of money the Government should ensure that the hotel and catering industry gets its fair share of the cake. Manufacturing and agriculture should get its share, but the cake should be divided equally. To withdraw the scheme from the hotel and catering industry represents a retrograde step. The budget will fuel inflation and its deflationary aspects will be felt in the coming months. The decision to increase VAT by 5 per cent on almost all essentials is a penal imposition on our people. Of course the full impact will not be felt for some time but the most serious aspect of that increase is that it will fuel inflation. The knock-on impact of that increase on the CPI will be enormous as the year goes on. I do not have time to refer to the effect of the VAT increase on fuel but suffice to say that it will affect the elderly people living in our cities. It will also hurt industry.
As I stated at the weekend this is a budget that even after spending many nights discussing one would not expose some of the hidden impositions. I am amazed that Ministers from the Labour Party presided over the measures in the budget. There is no use defending it in a patronising way, as occurred this morning, by saying that people were lucky to have a house, a job and enough to eat. I hope the Minister for Health, who will follow me, will not indulge in the same type of patronising attitude.
I shall confine my remarks to aspects of the health and social welfare services. I should like to commence with the decisions taken in conjunction with the budget which affect our health services.
The House will be aware that the policy decisions taken by the previous Government in conjunction with determining departmental allocations for 1983 were reflected in the published Estimates for the various Departments. In the case of the Department of Health I have had no option in the period of six weeks in office but to implement most of these decisions. I had considerable reservations, however, concerning the Fianna Fáil decisions to introduce public ward charges and charges for out-patient services. To my mind the introduction of such charges would represent a major policy change which should not be contemplated until there is an opportunity of reviewing fully the health care system, including the basis of entitlement and funding arrangements. I will be covering this ground in a White Paper which I intend to bring out before the end of the year.
The Government have decided, therefore, not to proceed now with public ward and out-patient charges. The loss of the extra income which would have resulted from such charges will be made good by other means. In addition there is the further saving of £10.3 million to be achieved on the published Estimate. These savings and the loss in income will be compensated for by savings elsewhere in the Estimate, which I will now describe.
The cost of the General Medical Services Scheme is expected to be about £7.5 million less than originally anticipated due to the trend of price increases of drugs and medicines being more favourable than earlier envisaged. The lowering of the British inflation rate helps us in the drugs prices negotiations.
Negotiations on levels of medicine prices have been concluded with the Federation of Irish Chemical Industries and a new agreement is expected to be signed shortly. Further savings on medicines are expected to arise on the basis of the new agreement, additional to the saving of £7.5 million.
The previous Government decided to adjust the drugs refund scheme so as to contain expenditure on the scheme with an overall figure of £13 million. Because of the limitation of the funds available for health, it has been decided to achieve further savings of £5 million on the scheme in 1983. Therefore, for this year the overall expenditure on the scheme must be confined to £8 million. This was regarded as a less undesirable cost saving option than others which were considered. The Voluntary Health Insurance Board will be adjusting their schemes to tie in with the changes to be made in the scheme. I will be making an announcement in a week or so about increasing the £16 drug refund limit.
There will be a saving of £1.8 million on subhead G9 of the Health Vote arising from a decision to wind up the National Community Development Agency. This saving is to be transferred to the Social Welfare Vote for the new Combat Poverty Organisation and certain other voluntary agencies. Finally, it has been decided that institutional budgets should be reduced by a total of £5 million. This, I might add, represents only about 0.65 per cent of overall institutional budgets. I am sending notification of that £5 million cut to the health boards and other health agencies in the next day or so.
I should now like to deal with the implications of adjustments in the estimate for non-capital allocations approved for health agencies for 1983. The changes in the Health Estimate and in the associated decisions will have to be reflected in the non-capital allocations for 1983 which were approved for health agencies. The extra income which would have resulted from the new hospital charges which the former Government had decided to introduce, namely, public-ward and out-patient charges, was reflected in the approved allocations for 1983. Because of the decision not to proceed with these, it is proposed to make appropriate upward adjustments in the approved allocations. On the other hand, the other cost-saving measures which I have described will enable allocations to be reduced.
My Department will be in touch shortly with health agencies in regard to the adjustments required in the allocations. Next Friday I will be meeting with the chairmen and chief executive officers of health boards. This will provide an opportunity for a full discussion in regard to the current year's budgetary situation of health agencies.
Most countries are becoming increasingly alarmed about the considerable escalation in the cost of health services. Our experience parallels that of other countries. Costs in actual terms, in real terms and as a percentage of GNP have increased over the past decade at a rate which cannot be contemplated for the future. In 1972-73 non-capital health expenditure amounted to about £108 million, representing about 4.7 per cent of GNP. In the current year the cost is estimated at £1,020 million which will represent almost 8 per cent of GNP. It must now be accepted that, whatever deficiencies there are in the present range of services, in the immediate future these can be remedied only in three ways:
(1) the extent that any extra funds required for this purpose can be released from other areas of health expenditure; or
(2) by charges for existing services; or
(3) by increasing health contributions.
Any decisions in these areas must be based in all instances on ability to pay a true and fair share towards the cost of such services.
I have referred to the adjustment in the non-capital allocation in the current year. This reality assumed a very concrete shape in July last when not only did it become apparent that additional moneys were not going to be made available but, in fact, moneys previously allocated had to be reduced. The economic situation has continued to deteriorate and our present difficulties have been fully spelled out in the budget presentation which the Minister for Finance gave to the House on 9 February last. In that scenario it would be quite unrealistic to anticipate that, in the immediate future, 1984-85, significant additional resources can be made available to the health services.
My objective must, therefore, be to ensure in the first instance that the essential fabric of the services is maintained by ensuring the maximum efficiency in the operation of the existing services, the rationalisation of services to promote that efficiency, and the elimination of practices and services which are either unnecessary or wasteful. Whatever expansion in the services is needed to meet urgent needs will have to be financed in a major way by the redeployment of resources both personnel and financial.
It has been suggested that some of the facilities within hospital services could be reorganised without serious implications for essential services. I am taking steps to have any such facilities identified in order to free up resources which might then be otherwise used. Freeing up resources in this manner is one way of trying to meet the continuing demands for expenditure in hospital services. For example, even after two months I am being pressurised to develop facilities for open heart surgery, for bone marrow transplants, for additional accident and emergency services and for other aspects of institutional care. It is clear that there is an ever-increasing demand for acute hospital services and these, as Deputies know, are particularly expensive services involving as they do large numbers of staff and very expensive high technology resources.
It is in this context that special project teams are currently working on various aspects of existing hospital services. These are reviewing such matters as hospitals admission policies. It is obviously of the highest importance that people who do not require to be treated within hospitals should not be admitted to them and that those who do require such treatment are discharged from hospitals as soon as possible after the completion of the appropriate treatment. In these two areas alone it will be very surprising if we do not discover that some improvements can be made which will have the effect of freeing up resources which might then be used to meet other demands within the services. In addition to these matters there is also an examination being undertaken of other aspects of the provision of hospital services. Specifically patient transport, purchase and storage of supplies, housekeeping and laundry in hospitals, and insurance arrangements of health boards are being examined. I am waiting, with some considerable expectation, an early outcome from these studies also.
With regard to out-patient services, my aim, as I have said before, is to try to lay a greater emphasis on treatment within the community. In pursuing this aim it is appropriate that we should, as we are in the process of doing, investigate very closely the existing arrangements for the provision of out-patient services. It is far from clear that the existing systems are the most effective. I have never been able to understand why it should be necessary to have people waiting three or four hours to see consultants, and I find it impossible to accept that there are not better methods of dealing with this problem than those currently in operation. Our aim should be to suit, as far as possible, both those providing the services and those receiving them. This would be a step towards more effective utilisation of hospital staff time and considerable saving to the many people who, in order to attend at out-patient departments, have to forego a half day's pay.
We must also devote a great deal more thought to the possibility of dealing with people on a day hospital basis. Some effective work has been done in different parts of the country in introducing this type of service and I hope that we can adapt approved procedures and extend them into all areas.
Similarly, I am looking also at the possibility of involving the general practitioner more closely in the delivery of services which can be provided on an out-patient basis. In deciding on the level of diagnostic facilities in the hospital we should, as a matter of routine, consider the extent to which it would be appropriate to have some or all of these facilities available to general practitioners. After all they are the people who know most about the patients for whom certain tests or examinations are being sought and there seems, in principle, to be a good deal to be said for ensuring that they can see to it that only necessary tests are done and that these are, to greatest possible extent, done on an out-patient basis. In doing so, one would help to maintain the general practitioner's responsibility for the continuing care of his patient, to help him to maintain the level of professional expertise which is desirable and, not least, to facilitate the patient in obtaining services.
I am, as I mentioned, anxious to promote to the greatest extent possible the provision of health care in the community. This has been the avowed intention of successive Ministers for Health in recent years and could almost be regarded as the conventional wisdom in the provision of health services. An examination, however, of the resources we have been devoting in recent years to the provision of services in the community suggests we have been only paying lip service to this ideal. In general financial terms the percentage of current health expenditure on community services in recent years has been falling rather than rising. Whereas in 1976 the percentage of current health expenditure on community services was approximately 23 per cent, it has in recent years fallen to below 20 per cent. The present position is therefore that, despite the general acceptance of the view that prevention of illness, the promotion of health and maintenance of people within the community are matters of fundamental importance and deserving of high priority, the actual allocation of our resources does not reflect this viewpoint. The proponderance of resources continues to be allocated to institutional care with the highest proportion of this going on the acute hospitals which contain the highest levels of medical staff, the most advanced technology and overall highest ratio of staff to patients. This situation will have to be changed and I intend to do so.
The capital programme for the next few years involves the completion of a number of major institutions. These and extensions to other large general hospitals will require the recruitment of the highest levels of medical staff and a very high level of nursing and other medical staff. The revenue costs of running these hospitals will make increasing demands during the next few years on resources which, it is quite apparent, are going to be much more limited then they have been in the past. I would have to say that in these circumstances it would seem to me that any increased expenditure, or even the restoration of the former level of expenditure on community care, can only be achieved by some restriction on the expansion of hospital services. I am having an examination undertaken of the possibility of doing this. It is not easy to make changes, particularly in projects which have reached an advanced level, but I am satisfied that it is necessary to do so if I am to give effect to my stated conviction that, to an extent, the existing balance in our health care expenditure requires adjustment.
One thinks in this connection in particular of services which are provided for the elderly. I would like to see an examination undertaken urgently of the existing services for the aged with a view to establishing the extent to which improvements in them can be effected and to identifying the services to which it would be most cost effective to allocated resources.
In short, we are taking steps to keep within the budget funds for 1983 which have been allocated to us. We are currently examining in the areas of greatest expenditure aspects of the provision of services which we hope will free resources which would be available to meet some of the claimant demands for newer or better services. I am in particular considering whether, in order to strengthen the community services, it would not be possible to find some money by slowing down to a limited extent developments in the provision of further hospital facilities. In particular, it will be my policy to devote the resource saved to the improvement of integrated institutional and community services for geriatric cases, for the continued development of community facilities for psychiatric cases and for the improvement of the living environment of long stay mentally ill persons. The replacement of outmoded and often fire hazardous accommodation will rank high in my priorities for capital moneys as will the replacement and improvement of facilities from which community health and welfare services are delivered.
The health service is a highly labour intensive industry and is the biggest employment sector in the public service. The number of persons currently employed, in terms of whole-time equivalents, is around the 60,000 mark. Apart from the eight health boards, which employ approximately two thirds of this work force, there are over 100 other voluntary and statutory bodies engaged in the provision of the health services. There are various voluntary hospitals, mental handicap centres and health corporate bodies, such as the National Rehabilitation Board and the Blood Transfusion Board. This work force is comprised of over 300 different grades which, taken in conjunction with the wide range of services provided, the number of different employment authorities and various types of specialist agencies involved, together go to make up a fairly complex industry. When we think of the health services we generally think in terms of doctors, nurses, dentists and para-medical staff and we tend to forget about the considerable back-up force that is necessary to any health care system — the engineers, technicians, catering and maintenance staff, administrative and clerical systems.
The past decade or so has seen a considerable expansion in the work force in the health services. If you take the health boards, for example, between the years 1974 and 1981 there was a 45 per cent growth in the numbers employed. Voluntary hospitals, including corporate body hospitals such as St. James's, would also have increased numbers to much the same extent over that period also.
The present recession, of course, and the Government's policies in relation to the containment of the growth of the public sector have affected the health services just the same as other sectors of the public service. With the considerable growth over recent years, however, we are in a position to take pause and look at the overall situation to see what remains to be done. Various studies and analyses are already under way as part of a general review of programmes. With the current lack of additional resources a closer look is being taken at how our existing resources are deployed so as to ensure that the optimum use is made of what we have at the moment.
In the present circumstances there would seem to be no alternative but to deploy our existing resources in accordance with the priorities to be given to the various aspects of the health services. This may necessitate the reshaping of our existing work force to accord with these priorities. As far as the professional staffs engaged in the provision of health services are concerned, we do seem, by and large, to have an adequate supply of well-trained people available. In the case of a few para-medical grades there is a slight shortage of skills, but in the overall context of the health services the numbers involved are very slight and it should be possible to overcome the problems in these areas.
In relation to medical consultants there is some difficulty in filling jobs in a few of the medical specialties, but recent developments in training programmes should remedy this situation. Also at medical consultant level there are some posts which have been approved by Comhairle na nOspidéal and which have not been filled because of the current lack of resources. This is a matter that will have to be looked at in the light of the current review of programmes to see what should be done as regards this matter. At this stage all I can say is that over the period I referred to earlier there was a much greater increase in the number of non-consultant hospital doctor posts than the average increase mentioned and it may be worth looking at the question of redeployment of resources in that area.
As we enter the fourth successive year of international recession, with its associated contraction of demand and unprecedented high levels of unemployment, we are faced with a budget situation where returns on the existing taxation base are not sufficient to maintain current levels of Government spending. The Government have, therefore, had to face reality in balancing the demands being made upon Exchequer finances with the resources available to it. I am acutely aware of the pressures generated by the recession for those who are sick or invalided, for those who are unemployed or who are retired and dependent on social welfare pensions. I am also acutely aware of the difficulties which the recession poses in making an adequate response. It is at times such as these that the need for the income-maintenance services are most stretched. It is essential, therefore, that resources are allocated to best advantage to help those whose needs are greatest.
The problems of the exceptionally high levels of unemployment are added to by the high proportion of young people in our population structure. This means an increasing labour force and results in very substantial increases in expenditure by the Department of Social Welfare before any allowance is made for increased payments. Since the 1983 Estimates were prepared by the previous Government the continuing rise in unemployment has made it necessary to provide an additional £31 million under this heading before any question of increases in rates of payment could be considered.
The extraordinary financial circumstances made a major provision in social welfare payments almost out of the question for this year. However, the long-term beneficiaries should, to a limited extent, have their benefits protected until a real increase can be provided in next year's budget. While short-term beneficiaries will receive a lesser increase, it must be borne in mind that many qualify for pay-related supplements, however much reduced. Neither I nor the Government are happy with the situation but it is nevertheless a provision having regard to the limited financial resources available this year.
Before the budget the Estimates for the Department of Social Welfare provided for a total overall expenditure of £1,780 million. Of this amount the Exchequer would have contributed some £949 million and the balance of £831 million would come mainly from contributions of employers and employees. As a result of the decisions taken in the budget, overall expenditure in 1983 will rise by some £86.6 million. This will come to about £160 million in a full year. The increased rates have been circulated to Deputies and I do not propose to comment on them at this stage. However, I wish to comment on a question that has come up quite frequently, namely, the misuse of the social welfare system.
I have referred already to the need to allocate the available resources to the best advantage in meeting the needs of those dependent on social welfare payments. There can be no doubt that when resources are scarce those who misuse the system are siphoning off funds which could be used to improve the lot of those who must, of necessity, rely on the social welfare system. Those who abuse the system are also placing an unfair burden on the working population who support these benefits through their PRSI contributions and taxation.
It is popular to believe in the current anti-welfare climate, which I deplore, that there is a high level of social welfare abuse. I believe that the extent of such abuse is much exaggerated. I am particularly concerned at a time of high unemployment to avoid attaching suspicion or odium to the overwhelming majority of unemployed claimants who are entitled under law to these payments. As an insured person since 1952, I have never in my working life had to "draw the labour" for myself as a single person or for my family as a married person. I suggest that those who talk so frequently about the "work ethic" and "work incentive" should try to live on unemployment benefit, unemployment assistance or even on pay-related payments. They should do so for four or five months, preferably for nine months and become long-term recipients. If some Deputies tried that exercise I think it would cure them of the paranoia that some of them have about the work ethic. I should like to quote Austin Clarke: I quoted him before in the early seventies when I did a paper for the Labour Party on social welfare. He said, "The poor have no friends, only their rights". At the same time I accept fully the need to combat misuse where it exists and I will do all in my power in this matter. I would point out also that we have a duty as citizens, not to mention the financial benefit as taxpayers, to prevent abuses. Many of the abuses spoken of today could not be perpetrated without full co-operation of others. If this co-operation were withheld there would be far less scope for such abuses.
We must also remember that abuses of the social welfare system are not confined solely to beneficiaries. Employers who default in the payment of PRSI contributions or who delay in remitting such contributions are also guilty of fraud, and a particularly reprehensible form of fraud at that. Not alone are they failing to meet legal obligations to their employees in the form of contributions to their social security, they are also misappropriating funds that have been deducted from the wages of their employees. I am concerned, particularly at a time when resources for social welfare are stretched for various reasons, that this problem will not be exacerbated by delay or default in the payment of PRSI contributions.
There has been some criticism of the changes relating to short-time workers. In general, about two-thirds of short-time workers will have incomes ranging from 81 per cent to 90 per cent of their fulltime net income and about one-third will have net incomes in excess of this level but substantially less than they had been received under the existing arrangements.
In respect of the changes proposed for disability benefit and pay-related benefit, it will mean about 86 per cent of net weekly earnings in current terms will be paid as against 98 per cent under existing arrangements. These changes are fairly substantial but at a time when there are 200,000 people on the live register we have no option but to spread the pay-related supplement as equitably as possible. Expenditure on pay-related benefit in 1981 amounted to £58.5 million, in 1982 it was £77.8 million and it is expected to amount to £61.3 million in 1983. There have been other changes which I will refer to on another occasion. The Government introduced the family income supplement scheme and an announcement about that will be made in due course. I do not propose to refer to the rates of PRSI contributions which are not being increased this year. About 155,000 workers will be affected by the provision to alter the ceiling from £9,500 to £13,000 from April next.
Apart from the £5 million in respect of the new family income supplement, the budget improvements in social welfare will amount to £80.6 million in 1983 and £157.5 million in a full year. To this must be added the cost of the improvements in health allowances which will amount to £3 million in 1983 and £5.9 million in a full year. I do not deny that the amounts are limited: they barely and in some respects do not meet the cost of inflation. However, we could not provide any real increase in 1983. This is a reflection of the grave unemployment situation facing us. It is also a reflection on successive Governments for their failure to develop a fair and equitable system of taxation and also to provide family income maintenance.
The extent to which this Government transform the situation will be the real yardstick of their concern for social justice and real equality in our society. When we came to office we had only a few weeks to look at the Estimates and make some relatively minor changes in order to bring in the budget. I hope we will be given the opportunity within a matter of a year or two to start on that work even in times of serious recession.
I listened carefully to the Minister's contribution. I hope he will be here some time in the afternoon to hear my reply to his statements in relation to expenditure on the health services.
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.